The sustainable business models for industry 4.0 in Vietnam

- THE SUSTAINABLE BUSINESS MODELS FOR INDUSTRY 4.0 IN VIETNAM.
- Managing the relationship between business and society has been one of the main topics in academic and business literature for a long time.
- In the Industry 4.0 world that is digitalizing and automating, sustainable business models exist but have not become mainstream..
- Sustainable business is the ideal business model but it is quite new in Vietnam, so it is necessary to learn the experiences of the world and the region in order to create the right model for Vietnamese enterprises..
- This paper focuses on the needed sustainable business model for industry 4.0 in Vietnam.
- Then, it explains three sustainable business model for industry 4.0 in Vietnam: (1) backward integration model, (2) Unilever’s sustainable business model and (3) Corporate Social Responsibility (CSR) model.
- Keywords: sustainable business model, Industry 4.0, Vietnam..
- Industry 4.0 – the fourth industrial revolution is changing how the world of business functions.
- This new revolution of not only production, but also way of creation and design of products, processes and organizations, has come to existence because of the inclusion of various new actors into the way society and business function: artificial intelligence, machine learning, the combination of potential of hardware, software, and humans..
- This paper discusses potential sustainable business scenarios, and proposes an agenda for research into how Industry 4.0 can be used to create sustainable business models..
- In other words, it is a business that “meets the needs of the present [world] without compromising the ability of future generations to meet their own needs.” It is the process of assessing how to design products that will take advantage of the current environmental situation and how well a company’s products perform with renewable resources..
- Everyone affects the sustainability of the marketplace and the planet in some way..
- Solow’s maintenance of the total capital stock is similar to a ‘rule’ proposed by Hartwick (1977).
- This assumption of substitutability lies at the core of the sustainability debate, and is discussed in detail below..
- They care about the impact (environmental or social) of the products they buy.
- the aspects of the environment that produce renewable resources such as water, timber, fish, solar energy • the functioning of society, despite non-renewable resource depletion.
- the quality of life for all people, the livability and beauty of the environment.
- Threats to these aspects of the environment mean that there is a risk that these things will not be maintained.
- Sustainability issues arise wherever there is a risk of difficult or irreversible loss of the things or qualities of the environment that people value.
- Some of the issues that pose major environmental sustainability problems include:.
- destruction of the living environments (habitats) of native species.
- The first time the notion “Industry 4.0” (derived from the German term “Industrie 4.0”) was mentioned in public, was at the “Hannover trade fair” in 2011, Germany (Kagermann, Lukas,.
- “Industry 4.0”, intends to encourage the German manufacturing industry to prepare for the future of production (Bundesministerium für Bildung und Forschung 2016).
- In the meantime the term Industry 4.0 is also widely used across Europe.
- Consequently the term Industry 4.0 describes nowadays in general the digital transformation of the manufacturing industry, which is accelerated by exponentially growing technologies, like for example intelligent robots, autonomous drones, sensors and 3D-printing (Bundesministerium für Bildung und Forschung 2016).
- Other terms appearing along with Industry 4.0 are the “digital transformation”, the “Internet of Things” or the “Industrial Internet (of Things.
- These terms are also applied interchangeably with the notion Industry 4.0 and the last two are used more commonly in the United States and the English-speaking world (Deloitte 2015, p.
- Whereas Industry 4.0 is focused specifically on the manufacturing industry, terms like the Internet of Things, the Digital Revolution and the Internet of Everything are more focused on enabling and accelerating the adoption of internet-connected technologies across industries, both manufacturing and non- manufacturing.
- Industry 4.0 describes a future state of industry characterized by thorough digitization of economic and production flows.
- In the globally interconnected world of Industry 4.0, machines also interact with one another..
- The Boston Consulting Group has identified Industry 4.0’s nine technological pillars:.
- But with Industry 4.0, the entire organization will be interconnected, and companies will be connected with one another..
- The operating processes of Industry 4.0 require more data sharing across sites and companies.
- With Industry 4.0, these technologies will be chosen for their very high performance in producing small batches of customized products..
- Called “Industry 4.0” in Germany, this manufacturing revolution is elsewhere reflected in expressions such as “Made in China 2025” and “Manufacturing Renaissance” (US).
- German experts reckon that we are now at 3.8, and that it will take a decade or so before we arrive at 100% Industry 4.0 manufacturing.
- Thus Industry 4.0 leads to new supply chain paradigms based on complex and intertwined manufacturing networks with changed roles of designers, physical product suppliers, clients and logistics service providers..
- (2014) pointed out that Industry 4.0 value chain will undergo the same fragmentation, which have emerged already before in other monolithic industries like music or the media and that this fragmentation comes along with low entry barriers for SMEs, i.e.
- the “slicing up” of the aggregate value chains, as well as the entry of new countries bearing low labor costs (Belussi and Sedita 2010).
- Consequently, Industry 4.0 will deliver greater flexibility and robustness and Industry 4.0–related value chains will be built of flexible and adaptable business structures, which possess the permanent ability for internal evolutionary developments in order to cope with a changing business environment (Koether 2006).
- properties, which have been pointed out by Warnecke and these five properties are also compatible with the discussed characteristics of the Industry 4.0.
- The process of building a fractal structure is based on relations between material, personal and information whereby inside a fractal structure these relations are closer and more intensive than on the outside, so that fractal building is comparable to mathematical cluster process based on the relationship and weights of the resources.
- In the context of Industry 4.0 due to the increasing importance of information, internet, cross–company interconnectivity in operations and supply chain management the weight of information gains significant importance in the clustering process whereby the supply chain comprises the entire product life-cycle process including product design and development, operations management and logistics (Koether 2006)..
- Thus coherence between the fractal concept of Warnecke and sub–organizations in Industry 4.0 can be identified as well as another observation of Warnecke stating that the information intensity and complexity inside a fractal is higher than between fractals.
- Consequently, also the workers in a fractal represent information processing individuals whose required skills and knowledge levels have to be relatively homogenous and strongly related to the used information quality of the fractal (Spath et al., 2013.
- Meanwhile many scholars have been inspired by the fractal concept and developed extensions of the fractal model in the direction of flexible relationship networks built of autonomous and interdependent manufacturing fragments (Canavesio, Martinez 2007.
- Such organizational expansions bring new responsibilities, new branches and growth, which gives room for the integration of information and manufacturing structures in the context of fractals, especially paving the way to the alliances of the fractals as they work together (Panetto, Molina 2008.
- The management headquarters of the company are located in a rural area in Western Estonia whereas the company operates in highly developed foreign markets like Germany, Sweden and UK.
- The business operations are distributed all over the world comprising global sourcing mainly in Europe and Asia, German R&D activities, cutting and production of components in Estonia, sewing in Ukraine of the final products and sales activities outside Estonia.
- The local units of the company benefit of the smart specialization advantages of the.
- This linkage of the company fractals is realized by Internet, common goals and standardized trans-fractal processes, which are fixed and illustrated by multi-media process documentation including e-learning tools that act as blueprint for the business processes in a fractal and the interfaces between the fractals.
- In summary it can be concluded that fractals can be considered as the new structural and organizational building blocks of Industry 4.0, where the different fractals are connected by related information flows, which control the processes inside and between the networks of fractals.
- (2014) this gluing function and the high importance of information in Industry 4.0 will open new business opportunities in the field of big data since every piece in the value chain is related and based on specific data characteristics touching the 4V of big data (IBM 2015.
- Sustainable business models for industry 4.0 in Viet Nam.
- The objective of the training program was to focus on improving milking techniques to improve the incidence of total bovine sperm and stem cells in dairy cows in the farmer households who supplied milk to FrieslandCampina Vietnam..
- The training program is part of the cooperation between FrieslandCampina and Agriterra, which was signed in August 2012, aimed at actively developing sustainable dairy farming in the countries where the plant is located.
- This is a cornerstone of the long-term strategic partnership between Unilever Vietnam and the Vietnam Women's Union..
- aims to help poor women in all 63 provinces of Vietnam improve their quality of life by helping them Better access to employment and education, the establishment of small businesses with the support of the Microfinance Program and improved family health care by raising awareness about health and hygiene.
- The Perfect Village model of the "New Rural Buildings".
- public-private partnership program is a comprehensive demonstration of the public-private partnership programs between Unilever and the Government of Vietnam..
- in accordance with the objectives of the national target program on new rural construction..
- The country was a part of the World Bank’s program Strengthening developing country governments’ engagement with Corporate Social Responsibility which “was set up to explore the potential roles of the public sector within developing countries to encourage and strengthen.
- The research focused on the footwear and garment industry which is the second largest export sector of the country after crude oil.
- Opportunities were seen in an increase of competitiveness of the involved enterprises.
- Today, there are attempts by the government to enhance CSR through laws such as the labor code and the reform of the union law.
- An important international initiative to spread the idea of CSR among Vietnamese enterprises is the project of the United Nations Industrial Development Organization (UNIDO) Helping Vietnamese SMEs Adapt and Adopt CSR for Improved Linkages with Global Supply Chains in Sustainable Production.
- The aim of the project is to raise awareness and entrench CSR standards in small and medium enterprises in Vietnam, thus enhancing their competitiveness towards global buyers.
- A very recent initiative that is financed by the US State Department is of the Fair Labor Association (FLA), a multi-stakeholder initiative in the USA with transnational outreach..
- An example is the Center for Development and Integration (CDI) which is also an active promoter of the ‘Business and Human Rights’ discourse to Vietnam..
- Sustainable business models in the future in Vietnam.
- Business models describe rationales how companies create, deliver and capture value and the process of constructing a business model is part of the business strategy (Hummel et al., 2010).
- Since Industry 4.0 embraces “networked manufacturing”, “self-organizing adaptive logistics”.
- Indeed, failures will always be a part of the pioneering landscape, especially when commodities have unstable market support..
- One of the fundamental challenges we face in societies that are fed on overconsumption is how to foster client contentedness with less especially after we have spent decades telling them they’ll be happy only if they consume more.
- DuPont is paid based on the number of cars painted, not the quantity of the paint used.
- Many of the products and services in this scenario will require a disruptive business model.
- If the company splits the value of the carbon savings, it could drive value from selling less, all the while keeping me well-covered..
- This innovation approach is in line with the internet and network orientation of the Industry 4.0 concept and it embraces collective concepts in innovation, especially all kinds of open innovation thinking.
- This development recognizes cluster aspects as well as the complexity and interdisciplinary of new R&D fields related to sustainability and multimodality and can be applied in the Industry 4.0 value chain with the targeted ICT infrastructure.
- So there are various intellectual property issues protecting the user’s contribution, which are often not taken into account by companies making use of the respective data, causing an eventual infringement of protected rights and therefore the sustainability of the company’s innovation policy..
- Industry 4.0 paves the way for new business models covering also new sustainability concepts of product life cycles.
- The product “teapot warmer” enjoys already now a lot of characteristics of Industry 4.0 because it is built in small series, consists of high quality steel parts and the full life-cycle of the product is traceable since the manufacturing takes place by craftsmen in Berlin and the selling and distribution is mainly realized via internet.
- Compared to ordinary product, the price but also the quality of the sustainable teapot warmer is significantly higher and the big difference to Industry 4.0 is that the manufacturing process is fully realized by persons and not in a network of CPS.
- Nevertheless the teapot warmer can be taken as a blueprint for a new business model in the context of Industry 4.0 due to the long list of common characteristics with Industry 4.0 as well as the need for developing a sophisticated marketing strategy for the sustainable teapot warmer in order to keep the high–.
- This approach develops further the well-known example of the recycling system of return bottles but now for an entire high–.
- By virtue of the high quality of the material and the stick-together technology of the product the producer is able to renovate the returned parts and sell them again to the next client with the same business model.
- Industry 4.0 opens now up the possibility to implement comparable business models also for complex products with cross-company operations and a complex supply chain due to the involvement of internet-use and CPS, which makes the full production process traceable and transparent so that life-cycle oriented business models like the teapot warmer can be realized also for sophisticated products.
- In this sense service design represents sustainable design since not the material product stands in the focus of the business model but the service, which is realized by the product, which poses new challenges since successful service design solutions have to be connected to a strong and coherent brand identity and a smart business model (Kaivo-oja 2012)..
- The fusion of cyber–world and material world in Industry 4.0 leads to virtual structures in the value and supply chains, which require organizational and managerial tasks for related cross- company operations processes in networks touching manufacturing, logistics and distribution (Sydow, Möllering, 2009).
- These management tasks are realized and controlled by information flows within the Industry 4.0 networks and they are running parallel to the physical value and supply chain flow (Simchi-Levi et al.
- Consequently, the physical value streams in Industry 4.0 – related supply chains require an appropriate cyber – platform to be able to control the parallel information streams and to handle the related business administration tasks..
- The concept of e-residency is in line with ongoing approaches in the context of Industry 4.0 trying to realize the fusion of the virtual and the real world, i.e.
- The results of these investigations reveal that the e- residency platform enables SMEs which are participating in Industry 4.0–supply chains to control the information streams of material added value streams of supply chains and to handle realted business administration tasks..
- Thus, the Estonian e-residency concept can be considered as the fusion of the cyber and business administration world which might play the role of international business administration platform for Industry 4.0 which possesses the potential to spur the evolvement of further international business models in the context of Industry 4.0, especially for internationally operating entrepreneurs and SME’s.
- The implementation of the sustainable business model in Vietnam seems to have just begun and only large enterprises are implementing this model.
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