How Vietnam’s Apparel Industry Can Recover Via Digital Transformation

Due to strict and prolonged COVID-19 lockdown measures imposed in Vietnam, the country’s apparel manufacturing industry is under threat of losing its status as a manufacturing powerhouse for international apparel brands. Restrictions in place have limited the operational efficiency of factories, and global brands like Nike and Gap are set to experience product shortages—a concerning development, especially when considering the potential economic implications involving such a disruption. 

However, much like how other sectors have weathered the effects of the COVID-19 pandemic, accelerating the digital transformation of the apparel manufacturing industry is shaping up to be the answer to many of the industry’s problems. 

The Issues Faced by Vietnam’s Apparel Manufacturers 

As per an article by Japan Today, the Hung Yen Knitting & Dyeing fabric mill located to the east of Hanoi—a factory responsible for production and supply to several international clothing brands—reported that their manufacturing output plunged by 50%. The same report states that due to the lack of mobility caused by travel restrictions, Vietnamese factories are also experiencing logistical delays as failure to deliver manufacturing necessities is becoming a frequent occurrence. 

While experts predict that Vietnam’s manufacturing woes will not have any significant economic effect in the third quarter, further issues may arise in the coming months especially due to the impending holiday season demand. As such, some companies may eventually lessen orders which of course means less business generated by the Vietnam manufacturing industry. Thus, both a combination of short- and long-term obstacles may crucially affect the Vietnam manufacturing industry’s growth.  

Digitally Transforming the Apparel Industry 

Although present efforts to contain COVID-19 in Vietnam are currently underway, the proponents involved in the manufacturing of apparel can do little but wait and plan for future endeavors. With that, Vietnam and its domestic factories should consider the importance of ensuring the digital transformation of manufacturing chain processes, specifically in the apparel industry.  

For example, one of the largest fabrics producers in the Nam Dinh province, Bao Minh Textile JSC, was able to apply several digital solutions and successfully automate its processes. By doing so, the fabric producer was able to reduce the number of direct workers as well as gather relevant manufacturing data through production equipment. 

According to a 2020 white paper by YCP Solidiance and Brother Machinery (Asia) Limited entitled Digital Transformation in the Apparel Industry: How to Improve Efficiency in Apparel Factory Supply Chain, research revealed that the adoption of digital technology by an apparel manufacturer improved productivity by 5%, while overall time and costs spent on production were also reduced by 88%. The integration of digital solutions in traditional processes resulted in several advantages, such as streamlining of orders and paperwork through an INS panel (tablet/digital application), speedily recording measurements that accurately reflect factory output and productivity, and properly evaluating employees via working ratio indexes.  

In line with improving manufacturing processes in the apparel industry through digital means, the Vietnamese government has developed a country-wide digital transformation project called the  National Digital Transformation Programme. Among the initiative’s goals is for the nation’s digital economy to experience a growth of 29% by 2025, and to do so, a large focus will be dedicated to accelerating digital transformation in eight specific sectors, with manufacturing as one of them.  

As both the government and private companies involved in apparel and manufacturing position themselves to digitally transform in a post-pandemic era, the road to recovery will surely be less turbulent.  

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