Container trucks wait to cross the border at Huu Nghi border gate with China in Lang Son Province, Vietnam, on February 20

According to Dr Reza Akbari, senior lecturer at RMIT Vietnam School of Business & Management, the effect of Covid-19 can be felt in Vietnam’s supply chains, considering that China is the country’s largest import partner and many of the imported goods from China are essential to Vietnam’s manufacturing sector. China is also Vietnam’s key market for farm produce.

Other important import partners of Vietnam such as South Korea, Japan, Thailand and the United States are also affected by the Covid-19 outbreak.

As the most heavily affected country, China has urged hundreds of millions of workers to stay home to prevent the spread of the virus. This resulted in many factories and manufacturing facilities being closed beyond the end of the Lunar New Year holiday.

“It is too early to predict or forecast what the full impact will be, but by looking at what is currently happening to the manufacturing industry, we can predict a significant disruption in the supply chains affecting all markets,” Dr Reza remarked.

A recent survey by the American Chamber of Commerce in Vietnam showed that many U.S. manufacturing firms operating in the country are suffering supply chain issues caused by the coronavirus pandemic.

Cost pressures on supply chains have pushed companies to focus more on lean manufacturing and outsourcing and offshoring strategies. If there is any disruption in the upstream side, manufacturing has to stop due to the lack of raw materials or components.

The Covid-19 outbreak is worrying many businesses and organizations across the country. “But on the bright side, it could be an era of arising opportunities to realize how fragile our current supply chain is and to improve it, thus changing the ways we are currently manufacturing, moving and paying for products and services,” Dr Reza noted.

By moving toward smart cities and digital transformation, the country can overcome many future issues, such as pollution, traffic congestion and epidemics.

Transformational technologies could be revolutionary in creating a smarter and better-connected supply chain ecosystem, resulting in a flexible working environment, the removal of many current human tasks from the workplace and protocol improvements for enhanced data sharing.

“To achieve this, not only governmental agencies, but everyone and every organization must work together. The faster we react to the crises, the sooner we can overcome any future disruptions or outbreaks,” Dr Reza concluded. SGT