Productivity, Quality Improvement Are Decisive to Business Development

Productivity is a decisive factor for the long-term competitiveness and survival of a company, and a basis for improving incomes, creating a good working environment and conditions for employees. Productivity helps raise national economic growth quality through the effective use of inputs such as “capital” and “labor” to increase output performance. Vietnam Business Forum has an interview with Mr. Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), on this issue. Lan Anh reports.

Productivity and quality are big concerns for Vietnamese companies. What do you think about the process of raising productivity and quality of Vietnamese enterprises?

So far, Vietnam has carried out the National Program for “Improving productivity and quality of products and goods of Vietnamese companies to 2020” (Program 712) for more than 8 years; built and synthesized many systematic solutions and measures with a series of advanced tools and advanced management systems enabling businesses to better perform their production processes by reducing costs and increasing productivity.

Specifically, nearly 5,000 companies have been supported to adopt ISO 9,000 and ISO 14,000 management standards or productivity improvement tools like 5S (1. Sort 2. Straighten 3. Shine 4. Standardize 5. Sustain), Lean or LSS (Lean Six Sigma) since 2010.

Especially, in just the period of 2016 - 2018, the program disseminated and guided the application of about 350 TCVN standards to key commodities and products made by more than 2000 organizations and enterprises through conferences and seminars. Besides, training experts in management systems, models, and tools was always focused for more than 3,000 students across the country.

However, in fact, many businesses are not active, not fully aware of the role of innovative tools advanced management systems to the process of improving productivity and product quality. Furthermore, the leadership of businesses sometimes still does not pay adequate attention or lacks determination to bring innovative solutions to production processes.

According to goals of Program 712, in 2016 - 2020, as many as 60,000 businesses will be guided to apply scientific and technological advances and innovations, and adopt management systems, models, and tools for productivity and quality improvement. 100% of companies producing key products and goods have built and implemented projects to improve productivity and quality.

While the Vietnam’s economy has today been creating stronger, more intense competition than ever before, how effective is the application of productivity and quality management systems and improvement tools for businesses?

Vietnam's economy has deeply integrated with regional and world economies where businesses must follow global rules. Companies with outstanding capabilities in executive management, financial management and strategic management will have obvious advantages, while businesses with weak capacity will face many hardships in competition or encounter the risk of being expelled from the market.

Over the past years, the program has carried out many activities to improve quality and productivity through disseminating advanced quality management systems, tools and models for productivity and quality improvement like 5S, Kaizen, Lean, TPM, 6 Sigma and KPIs. The application of productivity and quality management systems in Vietnam has produced many big changes. Many businesses have reportedly achieved 3-7 times more sales than those which haven’t applied them. If they do not really change by improving quality and productivity, they will face difficulty competing in today's fierce market. More importantly, it is crucial to raise the awareness of business leadership of the need for productivity enhancement, thus promoting the engagement of each individual and team of employees of that business.

According to the Department of Standards, Metrology and Quality of Ho Chi Minh City, businesses applying the ISO 9001:2015 management system have seen their productivity, revenue, profit grow significantly by 30% - 50% from a year earlier. Over 80% of their customers have bought their products again. Coordinating processes among departments have become more rhythmic thanks to clear assignment of responsibility. This is a typical example for businesses to be aware of the importance of applying advanced management systems to their operations.

However, in fact, many businesses want to apply innovative improvement tools but they do not know whether such tools bring in benefits and deal with their problems effectively or not. Besides, many are confused whether adopted systems and tools are suitable for them when there are so many available.

Vietnam’s productivity and quality improvement orientation in the next five years will focus on innovating the growth model, improving growth quality, labor productivity and economic competitiveness. Accordingly, Vietnam will attach importance to developing human resources, give priority to developing and transferring science and technology, and robustly develop the private economic sector. Specific strategies include researching and developing comparative productivity data systems and supporting projects for sectoral productivity improvement sectors and sectors to enable Vietnam to achieve its goal of productivity improvement and enhance overall economic productivity.

It is said that quality and productivity improvement policies only focus on improving productivity and quality for enterprises while this is a matter of the nation, enterprises and households. What do you think about this? Do you have any recommendations for solutions?

Vietnam’s labor productivity improvement policy has partly solved the relationship between productivity and quality at the back of the doi moi (renovation) period. The target of increasing labor productivity by 5.5% per year in the 2016 - 2020 period is quite challenging for Vietnam when average labor productivity growth was just 4.3% per year in the 2011 - 2015 period.

Improving labor productivity must start from top leadership’s commitment to ensure that the policy will be implemented effectively to bring about good results.

The Government needs a strong commitment to execute the policy, ensure that any emerging issues will be addressed, and the policy will be executed effectively to turn out good results. The issue of raising national awareness should be also emphasized, meaning all people - leaders at all levels, business leaders, workers, farmers and students - need to be aware of the special importance of quality, productivity and labor productivity to every person and the whole country.

In order to have a stable, quality, productive labor force, business leaders must have a very clear orientation and strong commitment to product development and make their employees know that companies will only have quality products and grow up if they have high productivity. If they do not have good products and cannot export, workers will have no jobs and no income.

In addition, the Government should create opportunities for vocational training for young people and young workers through local trade promotion centers; launch courses for workers to prepare for jobs, improve knowledge, technology, foreign language and computer skills so that they feel secure to work long and grow the current open, integrating environment.

What should authorities and businesses themselves do to build and carry out plans for higher product productivity for businesses?

This is the work of all ministries and branches, not any single one. We need to mobilize all resources to create a general “steel punch” to attract more businesses to participate in building quality improvement plans and bring practical benefits to businesses.

When carrying out these plans, businesses need to have appropriate solutions like determining core models to create common sense and inspiration for other businesses. Then, they will place themselves in the relationship with others in link chains where nuclear businesses must go with satellite supporting ones. Typical companies with advanced systems and models will share experiences with others to build a foundation for creating sustainable joint benefits; study intensive, systematic measures; and grasp their actual performance to work out specific plans.

They need to determine which stage is key in the production process that needs to be improved, to avoid ineffective unfocused investment and achieve the highest outcome. If necessary, they can rely on business associations and industries to share their hardships and wishes to seek solutions.

For their part, authorities must build a database and knowledge about quality and productivity for enterprises to access, study and learn for application; and build an expert network to help businesses tackle emerging problems. The application of advanced management systems and tools should be combined with modern technologies to create breakthroughs.

Thank you very much!