Managing supply disruptions to maintain Vietnam’s economic growth during the pandemic

Tiếng Việt

Managing supply disruptions to maintain Vietnam’s economic growth during the pandemic

Actions taken by the Vietnamese government to mitigate the impacts of the COVID-19 on supply chains, and business and production activities are contributing to help Vietnam achieve the dual goal of containing the pandemic and maintaining economic growth.

Economic risks from supply disruptions

RMIT Senior lecturer and Logistics & Supply Chain Management Research Cluster Lead Dr Pham Cong Hiep has assessed the economic risks from supply disruptions of several different areas during the pandemic.

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Workers in food factories cannot work remotely due to their nature of work.

“A majority of staff in manufacturing, agriculture and essential services can’t work from home due to their nature of work. If they are required to stay home, there will be negative consequences on production activities, order processing and raw materials management,” Dr Hiep said.

“There will be fluctuations in household goods supply when consumers are concerned about the negative impact of production stagnation. Excessive buying makes the shortage worse, leading to the bullwhip effect when demand distortions happen,” he claimed.

“For services such as house rental, medical and entertainment, there will possibly be dramatic increase or decrease in demand for a short time when employees have to change their workplaces due to movement restrictions.”

Dr Hiep gave an example that provincial medical facilities may have to cope with an increased number of patients because people cannot go to the hospitals in Ho Chi Minh City due to quarantine measures applied to those coming from Ho Chi Minh City.

According to Dr Hiep, the production and consumption of fresh goods will also be affected when each region now tend to specialise in certain products and can’t cope with sudden changes in customer demand.

Containing the COVID-19 pandemic while maintaining the economic growth

Empirical evidence from many countries revealed conflicting views about the main impact of the pandemic on the world economies.

Some believe that social distancing, not COVID-19, is causing negative impact on the economy.

Others think is if the outbreak is out of control, economic activities could drop as much as 30% per month because COVID-19 infected workers cannot come to work. This has excluded other social impacts such as morbidity and mortality.*

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RMIT Senior lecturer and Logistics & Supply Chain Management Research Cluster Lead Dr Pham Cong Hiep has proposed some measures to help Vietnam manage supply disruptions and maintain economic growth during the pandemic.

In response to the dual goal of the Vietnamese government, Dr Hiep has proposed some measures to balance the coronavirus fighting and reviving the economy efforts.

Identify key economic sectors and the maximum level of reduced activities that these sectors can tolerate due to social distancing without having negative impacts on the whole economy: medical and energy supplies, production of essential goods and key supply chain services, and transportation of goods and passengers.
Identify and maximise local economic sectors that can arrange remote working and operate effectively even with minimal social interactions, such as education, technology, or trade services. Research shows that reducing social activities in certain industries will also reduce the risk of infection for workers in essential industries.
Establish guidelines, procedures and regulations for risk assessment and reinforce the appropriate behaviours of all participants in the supply chain to ensure overall effective disease prevention. This helps avoid the situation in which some businesses make big investment in their safety measures but the whole supply chain is less effective due to certain members do not comply.
Establish health measures to avoid supply disruptions by accepting a controllable level of infection in the community to reduce risks and costs to the economy. A return to normal depends on the ability to do contact tracing, conduct large-scale COVID-19 testing and effectively isolate infected people.

About the expert

Dr Pham Cong Hiep is Senior Lecturer from RMIT University’s School of Business & Management. He has over 10 years of research and teaching experience in the fields of logistics management systems, business technology, and IT application in education.
(*) Source: https://voxeu.org/article/social-distancing-and-supply-disruptions-pandemic.

Story: Le Mong Thuy