'Path of life' for Vietnam's wood industry: Digital transformation in wood business management

4.0 in wood industry management

According to Mr. Le Minh Thien, Chairman of Binh Dinh Timber and Forest Products Association, digital transformation in processing factory management has been the unit's enthusiasm over the past 10 years. There are many factories, directors, and owners of wood businesses in Binh Dinh who wish to bring a digital management system into their business operations. Many businesses have spent a lot of money and effort to implement 4.0 in wood industry management and achieved certain successes. However, to further improve, there needs to be a process and experts advising on solutions to change the management method.

"In Binh Dinh, there have been many large-scale factories that have spent a lot of money pursuing transformation over the past 10 years but are still at the toddle stage. With decades of experience in the wood processing industry, I realize that applying 4.0 to wood industry management is extremely difficult and complicated. However, nothing is impossible. Because a factory that previously operated with a scale of only 200 workers has now increased its capacity and labor to 2,000 workers. Previously, export turnover only reached USD 5 million/year, but now it has increased to USD 50 million/year, so if we do not change the way of management or the management system, we will definitely lose," said Mr. Le Minh Thien.

Mr. Nguyen Liem, Vice Chairman of the Vietnam Timber and Forest Products Association and Director of Lam Viet JSC (Binh Duong), shared: Digital transformation is no longer a movement but a reality that wood businesses have to face with and implement at all costs. Each company has different circumstances, advantages, and difficulties, but with determination, nothing is impossible.

Mr. Liem affirmed: To successfully implement digital transformation, the prerequisite is that the business leader must be determined to the end. There are many businesses that have been pursuing digital transformation for 1-2 years but give up midway due to impatience. Not only does it require the determination of the business leader, but the business management team must also agree and be determined so that the digital transformation can be successful.

"When my business implemented digital transformation, employees both had to operate the old system to handle daily tasks and had to access the new system after office hours to get used to the new technology until midnight for several months. If the business's management team does not agree and is not determined, no matter how determined the business owner is, it will be difficult to succeed," shared Mr. Nguyen Liem.

Existing benefits

As the head of Lam Viet JSC, a large wood business in Binh Duong, Mr. Nguyen Liem shared more about the benefits of digital transformation. The management force of Lam Viet JSC sometimes has up to 90 employees because this business has many customers and many orders. After this business had management software, the company's management department now has only 30 people, a decrease of 60 people. Not only can personnel costs be reduced, but the bigger benefit is that business leaders have data to plan strategies, build production plans, and know whether the order brings a loss or a profit.

"Management software is comprehensive from warehouse to price, cash flow, personnel, etc. Even the management software clearly reports on the date of purchasing the belt in the line, the belt’s number of operating hours, and the actual situation. If the factory's equipment is damaged, the software will immediately notify us of which is broken to fix," Mr. Nguyen Liem said.

According to Mr. Liem, the system’s features of productivity forecasting and optimization have helped Lam Viet Company proactively prevent late deliveries, increasing its reputation with customers and partners. Thus, the company has received many large orders from corporations such as Kingfisher, Hartman, Silver Cross, and JB Global.

Faced with the above-mentioned benefits, Hoang Hung Co., Ltd. (Binh Dinh) has decided to participate in digital transformation. According to Mr. Le Minh Hung, Deputy Director of Hoang Hung Company, the company is producing according to a production line system. In line production, there are many problems arising, such as data storage; data update speed on the system so that all departments in the company can grasp data; customer data and order management system from the stage of raw material preparation to the stage of shipping. Therefore, the company is in dire need of software to synchronize the above-mentioned stages.

"It is realized that many companies have applied digital transformation and found it very effective. Although the cost is high, this is a worthy investment. Hoang Hung Company has an annual revenue of USD 12 million and approximately 500 workers. The cost of implementing digital transformation is estimated at about VND 4-5 billion," said Mr. Le Minh Hung.

According to Mr. Hung, the current management method of Hoang Hung Company is that the statistics department counts the productivity of each worker and each department every day. This implementation method is bound to have errors. Digital transformation will help the company manage the work quality and productivity of each worker and each machine better than the current manual management method.

"The software also manages the warehouse; all data is updated in the system, showing in real time how many goods are being imported and exported in the warehouse. Leaders get the data needed from the system instead of having to contact any department or individual, minimizing travel time," said Mr. Le Minh Hung.