Research on the capacity of providing service of Vietnam logistics enterprises in the northern key economic region

ation of logistics enterprises 1.1.2.1. Logistics enterprisses definition Logistics enterprises are understood as: "an economic legal entity with the purpose of providing one, several or entire logistics services at the request of customers". 1.1.2.2. The role of logistics enterprises 8 The role of logistics enterprises Logistics enterprises have a role in the supply chain: connecting goods transactions between suppliers and customers in the supply chain; Logistics enterprisses help businesses in the supply chain focus on developing core and specialized competencies. 1.1.2.3. Classification of logistics enterprises There are many ways to classify logistics enterprises, within the scope of the thesis, they are divided according to different criteria: according to the type of service provided; the goods type; the position of participation and level of integration in the supply chain; ownership level & scale. 1.1.3. System and process of providing services of logistics enterprises 1.1.3.1. Service supply system of logistics enterprises The service delivery system helps to clarify the interaction between customers and employees through the service supply process, and at the mean time shows how they are supported by the activities and systems behind. For customers, the service supply system gives customers a better service experience, exploit the value of the benefits of the service. For providers, the service supply system facilitates the integration of resources with the operational activities of logistics enterprises. 1.1.3.2. The services providing process of logistics enterprises Researching from the perspective of being a logistics service provider, the process of providing services consists of many stages, starting from the time the enterprise determines the needs of its customers until the customers consume products/services of businesses. 1.2. DEFINITION, FACTORS AND CRITERIA FOR EVALUATION OF SERVICE PROVISION CAPACITY OF LOGISTICS ENTERPRISES 1.2.1. Definition of service provision capacity of logistics enterprises 1.2.1.1 Resources and capabilities of enterprises a. Resources of enterprises The enterprise resource theory states that it is the resources of the enterprise that will determine the competitive advantage and business efficiency of enterprises. The essence of the theory states that businesses can gain and maintain a competitive advantage by creating and deploying valuable capabilities and resources (Wernerfelt, 1984). Aziz and partner (2015) through a survey with managers of logistics enterprises 9 found that resources of logistics enterprises include: physical resources, management resources, technology resources, relational resources and organizational resources. b. Capacity of enterprises Competence - Based View (CBV) Businesses management perspective focus on the ability to use, combine assets, resources, and capabilities to achieve the overall growth and efficiency of the organization. It was developed primarily by the studies of Barney (1991), Wernerfelt (1984), Peteraf (1993), Sanchez and Heene (1996, 2004, 2008, 2010). Studies by Sanchez and Heene (1996, 2004), Freiling and partner (2008) confirm that competencies created by adding capabilities, combining resources to create competitive advantages and allow companies to achieve strategic goals. According to Sanchez and Heene (1996, 2004), organizations organized as an open system of resources, resources flow deployed and coordinated in the process will create and distribute value. 1.2.1.2. Definition of service provision capacity of logistics enterprises The definition of service provision capacity in this study can be stated as follows: “The service provision capacity of logistics enterprises is the ability to create, deploy and coordinate logistics enterprises' resources to meet the demand for logistics services of customers, provide added value to customers and achieve business goals of the enterprise ”. (Source: Compiled and developed from Lai, 2004; 2010; Sanchez and Heene, 1996). 1.2.2. Factors contributing to the service provision capacity of logistics enterprises Mentzer et al (2004) suggest that the result of the service supply process of an enterprise is to create value to meet the needs of customers at the highest level. This is the core element for to businesses build a competitive advantage, achieve long-term profits and help enterprises to survive and thrive in competitive environment. Customers' requirements for LSPs often focus on: providing package services, being punctual, ensuring safety and right products, ensuring flexibility and responding to unexpected requests. Therefore, the evaluation of logistics capacity is the assessment of the provision capacity of logistics enterprises. For enterprises, providing services must stem from the needs of customers. Therefore, for service providers in general and logistics service providers in particular, the ability to identify and meet customer needs is one of the important components of the service provision capacity. After that, logistics enterprises will carry out specific operational processes to meet customers' 10 demand for logistics services. This process consists of many diverse and relatively complex stages. Through the service delivery process, customers' needs will be met and transformed into the result of service provision. In order for the service results to satisfy customers with the highest quality, logistics enterprises must be able to meet requirements of customers on the following criteria: time, accuracy and safety, flexibility in solving situations and handling of complaints from customers. Therefore, to evaluate the service provision capacity of logistics enterprises, it is indispensable for operational competence components. If the ability to identify and meet customer needs and operational competence is conssidered as the necessary conditions, the information management capability would be the sufficient condition for the services provision capacity. In order to provide services to customers on the basis of maintaining and developing market share as well as profits, identifying advantages to achieve the goals, logistics enterprises must "synchronize" the capabilities and available resources. To do so, logistics enterprises need to have integration and connectivity capability. Figure 1.9: Factors contributing to the service provision capacity of logistics enterprises (Source: Proposed by PhD student, 2019) Research students identify four factors that constitute the capacity to provide services of logistics enterprises, which are: capacity to identify and meet customer needs; operational capacity; information management capacity; integration and connectivity capability. 11 1.2.3. Criteria for evaluating the service provision capacity of logistics enterprises Based on the literature review of the authors Mentzer et al (2004); Shang and Marlow (2007); Lai (2004; 2010), PhD student proposed the criteria to evaluate the service delivery capacity of logistics enterprises. Then, the PhD student carried out interview to consult with experts to assess the suitability of the proposed criteria. PhD student had a direct discussion with experts in the field of logistics to collect information needed for research. Experts consulted include: scientists at research institutes, universities and colleges; policy makers working at the Ministry of Industry and Trade; logistics enterprises in the Northern key economic region. Among the 23 proposed criteria, the percentage of criteria with an average of 2.5 points or more is 100% (23/23 criteria; none of the criteria has a score below 2.5 points); The average value of the criteria ranges from 3.58 to 4.79 points. This result shows a very high level of agreement among the experts with the criteria proposed by the PhD student. With the results, the above 23 criteria will be used in large-scale surveys with service providers and customers using services to evaluate service provision capacity of Vietnam logistics enterprises in the Northern key economic region. 1.3. FACTORS AFFECTING SERVICE PROVISION OF CAPACITY LOGISTICS ENTERPRISES 1.3.1. Macro environment: national logistics infrastructure, economic factors, political - legal factors; Science - technology factors. 1.3.2. Industry environment: customers, competitors, partners _______________________________ CHAPTER 2. EVALUATION OF ACTUAL SITUATION OF SERVICE PROVISION CAPACITY OF VIETNAM LOGISTICS ENTERPRISES IN THE NORTHERN KEY ECONOMIC REGION 2.1 OVERVIEW OF LOGISTICS SERVICES IN THE NORTHERN KEY ECONOMIC REGION 2.1.1. The socio-economic development advantages of the Northern key economic region have an impact on the development of logistics industry The northern key economic region includes 7 provinces and cities: Hanoi, Hai Phong, Vinh Phuc, Bac Ninh, Hai Duong, Hung Yen and Quang Ninh; with a natural area of 15,594.2 km2, accounting for 4.7% of the country's natural area. The population 12 is about 14,467 thousand people, accounting for 16.31% of the national population and the average population density is 875 people/km2. From the socio-economic features of the key economic region, there are several features that create advantages for the development of logitics service industry: the region has a special geopolitical and geo- economical position which is a extremely important prior condition for the strong development of the fields of economy - politics - society in general; a relatively diverse economic development potential and allow economic to develop in the direction of multi-sectoral and high quality; clear conditions and potentials to quickly develop trade and service sectors, especially high-quality trade and service industries; advantages to develop into a major industrial center of the country. 2.1.2. Features of Vietnamese logistics enterprises in the Northern key economic region The northern key economic region also recorded a rather busy operation of logistics enterprises. The number of businesses here is about 10,878, accounting for 29.2% of the country. The average number of employees is about 21 employees / enterprise with an average capital of about 23.4 billion. Logistics enterprises in the key economic region are mainly located in Hanoi and Hai Phong. Like other key economic regions, there are currently 3 groups of enterprises participating in logistics services, namely multinational corporations, state corporations, private companies or joint stock companies. In general, there has been an improvement compared to the past that enterprises have paid attention and invested to the quality of human resources as well as equipment. However, service provision capacity is still limited compared to the requirements from the client side, the competitiveness and business efficiency are still low and inadequate with the development potential. 2.1.3. Demand for logistics services in the Northern key economic region Enterprises often combine self-employed and outsourced logistics activities to ensure production activities. According to experts from VLA, the outsourcing rate of logistics service industry in Vietnam ranges from 60% - 70%. 2.2. ANALYSIS OF FACTORS AFFECTING THE SERVICE PROVISION CAPACITY OF VIETNAM LOGISTICS ENTERPRISES IN THE NORTHERN KEY ECONOMIC REGION. 2.2.1. Macro environment 13 - National logistics infrastructure: At present, the national logistics infrastructure for logistics activities in Vietnam in general and in the Northern key economic region in particular is quite poor, small-scale and not really reasonably distributed leading to poor connectivity. - Economic factors: In the period of 2010 - 2019, the economy of Vietnam achieved a relatively high growth rate compared to many countries in the world, the following year consecutively reached the growth of over 7%, an average of 6.1%. The average growth rate of the retail industry is about 12% per year, which depends greatly on the economic growth of Vietnam in recent years. - Political - legal factors: The policy of innovation, openness, safe and secure living environment is the prior reason for the volume of foreign direct investment in Vietnam. In addition, the administrative procedure and institutional reform program in Vietnam demonstrated the determination of creating favorable conditions for citizens and enterprises, especially in the field of logistics. - Scientific and technological factors: The application of artificial intelligence or robots to perform a number of services, such as container loading or unloading, loading and unloading goods in warehouses are gradually appearing in the context of the 4th industrial revolution. 2.2.2. Industry environment - Customers: consider the cooperation relationship of the owners is also one of the criteria to evaluate the service provision capacity of logistics enterprises as well as considering how the customer impacts the service provision capacity. This relationship shows the level of cooperation or customer loyalty for the enterprises. - Competitors: Vietnam has about 30 logistics service providers operating in Vietnam. Compared with domestic enterprises, these enterprises have advantages in transportation contracts with large shipping lines due to the parent company signed with shippers with global networks, the advance level of investment in information technology applications, advanced management level and especially good relationship with global customers. - Partners: Suppliers in some areas are tending to merge into a few specialized supply groups instead of each supplier operating individually as usual. 14 2.3. ANALYSIS OF THE SITUATION OF RESOURCES OF VIETNAMESE LOGISTICS ENTERPRISES IN THE KEY ECONOMIC REGION OF THE NORTH REGION The results below reflect the current state of resource factors affecting service provision capacity of enterprises. - Human & management resource factors: 4.42/5 & 4.34/5 points on average, these two factors are assessed to have the greatest impact on the capacity of Vietnamese logistics enterprises to provide services in the Northern key economic region. - Technological and physical resources factors corresponds to 4.15 and 3.89 points of assessment;; - Relational resources factor: 3.91 points. According to the evaluation of logistics enterprises in the Northern key economic region, this relationship is assessed at a fair level for customers and partners; - Organizational resources factor: 3.9 points of evaluation. Logistics enterprises in the Northern key economic region have quite simple organizational structures without high specialization. - Branding and culture factor, these are the two factors that are assessed to have the least impact on the service provision capacity of logistics enterprises among all resource factors. However, at the assessment level, these two factors are assessed as quite important and directly affect the capacity to provide services, respectively with 3.67 points and 3.31 points. 2.4. ANALYSIS OF THE STATUS OF SERVICE PROVISION CAPACITY OF VIETNAMESE LOGISTICS ENTERPRISES IN THE NORTHERN KEY ECONOMIC REGION 2.4.1. Ability to identify and meet customer needs. The results from Figure 2.10 show that LSPs' ability to identify and meet customer needs is at an average level for both groups of businesses. In particular, the group of small and medium enterprises is at 3.46 points; micro enterprises group with a score of 15 3.3. Figure 2.10: Evaluating the ability to identify and meet customer needs of Vietnamese logistics enterprises in the key economic region (Source: Survey of phD student) The ability to identify and meet the needs of customers of logistics enterprises is only at average level, with the average assessment for both groups of enterprises only reach 3.46 points for small and medium enterprises micro businesses and 3.32 points for micro enterprises. Evaluation results are also similar to the assessment from customers (3.24 points). In this ability, the majority of enterprises' self-assessment points are higher than customers' assessments (3/5 criteria are evaluated by enterprises at a higher level; 2/5 of enterprises' assessments are at level equivalent to customer reviews). The above results show that there is a gap between the ability of enterprises and customer expectations. 2.4.2. Operational capacity Operational capacity of logistics service providers is assessed to be quite good. In particular, the group of small and medium enterprises self-assessed at 3.69 points; the micro enterprises group was at 3.54 points and customers rated at 3.55 points. According to the evaluation results, there are 5/8 criteria businesses rated themselves higher than the evaluation of customers; 1/8 criteria have the similarity between the evaluation results of the 2 parties and 2/8 criteria the customers evaluated the operational capacity of logistics service providers higher than the level that enterprises rated themselves. In general, the operational capacity of service providers is assessed to be rather good, but most of the surveyed enterprises are small-scale enterprises and 3.35 3.48 3.65 3.5 3.33 3.16 3.35 3.54 3.32 3.27 3.16 3.06 3.61 3.08 3.27 3.00 3.15 3.30 3.45 3.60 3.75 Ability to provide a variety of services Wide scope supply ability Ability to provide quality consistent with price services Ability to innovate services to keep up with customers' needs Ability to respond quickly to changes of customers Customer group Micro enterprises group S&M enterprises 16 provide single services. The number of enterprises surveyed which provide package services are still modest. Figure 2.12: Evaluate operational capacity of Vietnamese logistics enterprises in the Northern key economic region (Source: Research synthesis of PhD student) Therefore, the above analysis results have great meanings for enterprises providing single services but do not reflect the operational capacity of the group of enterprises providing package services. With the global demand of full-package logistics services, it is imperative for service providers to improve their capabilities and then they can take the first step in competetiton with foreign service providers. 2.4.3. Information management capacity The faster and the more accurate the information is transmitted, the more effective the decisions related to logistics would be. However, it can be affirmed that one of the reasons for unreliable service provision capacity in many enterprises is due to the poor application of information technology. 3.97 3.74 3.32 3.54 3.52 3.96 3.81 3.68 3.89 3.85 3.29 3.53 3.39 3.58 3.27 3.52 3.84 3.62 3.36 3.61 3.49 3.66 3.31 3.5 3.25 3.50 3.75 4.00 Ability to delivery as time committed Ability to ensure goods safety, delivery of correct quantity & volume committed Flexibility with the urgent requirements of the customer Ability to consult customers with suitable service Ability to ensure high reliability during process Ability to ensure professionalism during process Ability to ensure transparent information Ability to handle complaints of customers Customer group Micro enterprises group Small & Medium Enterprises group 17 Figure 2.13: Evaluate the information management capacity of Vietnamese logistics enterprises in the Northern key economic region (Source: Survey of phD student) In the criteria to assess the information management capacity of service providers, 2/5 criteria achieved a decent level for small and medium enterprises; 1/5 criteria achieved a good level according to customer reviews; Micro enterprises do not have any criteria to be ranked well. Information management capacity of logistics enterprises as assessed at a fairly limited level, the data shows that both groups of small and medium enterprises, micro enterprises group when assessed were equally below 3.5 points. Comments from customers also showed similar results with 3.36 points. Restrictions are pointing out that domestic logistics service providers are struggling to compete with foreign enterprises. 2.4.4. Integration and connectivity capability The final results show that there is a strong divergence in self-assessment of integration and connectivity capability among the groups of businesses surveyed. If small and medium enterprises group has 4/5 criteria to achieve good level; 1/5 criteria reached the average level, the micro enterprises group had completely opposite results with only 1/5 criteria achieved the good level; 2/5 criteria achieved the average level and 2/5 criteria rated as weak. Besides, the evaluation results from customers seem to be quite similar to the group of micro enterprises, specifically: 1/5 criteria are quite good; 3/ criteria are medium and 1/5 considered weak. 3.49 3.52 3.68 3.09 3.44 3.21 3.47 3.47 3.16 3.21 3.37 3.46 3.59 3.01 3.35 3.00 3.15 3.30 3.45 3.60 3.75 3.90 Ability to collect and process information quickly, accurately & effectively Ability to collect information with high reliability Ability to convey information fully, accurately & timely Ability to have high information security Time saving in looking up information Customer group Micro enterprises group Small & Medium Enterprises group 18 Figure 2.16: Assessing the integration and connectivity capability of Vietnamese logistics enterprises in the Northern key economic region (Source: Survey of phD student) Through the results of the survey, the integration and connectivity capability of logistics service providers still reveals many limitations, there was not a really close- knit connection with customers and especially with partners. The ability to integrate to ensure the package factor as well as integrate many customers to have the opportunity to reduce costs has not met customer expectations. Improving this capacity does not only aims at improving the provision capacity of logistics enterprises but also helps enterprises increase their competitiveness. 2.5. ANALYSIS OF THE SITUATION OF SERVICE PROVISION CAPACITY OF SOME VIETNAMESE LOGISTICS ENTERPRISES IN THE NORTHERN KEY ECONOMIC REGION 2.5.1. Intercargo Logistics Joint Stock Company The service provision capacity of Intercargo Logistics Joint Stock Company is at an upper average level (3.4 points), higher than the average of logistics enterprises in the key economic region according to customer reviews (3.31 points). Among the criteria, a quarter of the criteria rated by customers are slightly higher than the average level (3.62 points / 3.36 points) and 3/4 of the remaining criteria of Intercargo is similar to the enterprises surveyed. 3.68 3.88 3.36 3.5 3.56 3.36 3.67 2.66 2.13 2.28 3.45 3.92 3.27 2.22 2.86 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 4.00 Ability to effectively connect with internal resources Ability to effectively connect with customers in the service provision process Ability to connect with partners in the service provision process Ability to flexibly integrate multiple customers on the same route Ability to flexibly integrate multiple services to ensure package factor Customer group Micro enterprises group Small & Medium Enterprises group 19 Figure 2.18: Assessment results of service provision capacity of Intercargo Logistics JSC (Source: Survey of phD student) Besides the advantages of Intercargo, the company still exposed many weaknesses during its operation. First of all, Intercargo is a small-scale company with limited resources, the services that the company provides are still limited, human resources of the company are small in number, quite young age and mostly work at the field contrary to the trained profession. This directly affects the quality of service provided. In addition, the current state also shows that Intercargo, like other small businesses in the same field in the market, is not really ready to work with other businesses to create higher supply value which leads to ineffective business results, low profits and sluggish growth. 2.5.2. Orient Shipping & Trading Joint Stock Company The service provision capacity of Orient Shipping and Trading Company is quite good (3.39 points), higher than the average of logistics enterprises in the Northern key economic region according to customer reviews (3.31 points). Amon