lOMoARcPSD|39211872 VIETNAM NATIONAL UNIVERSITY – HO CHI MINH CITY INTERNATIONAL UNIVERSITY SCHOOL OF INDUSTRIAL ENGINEERING & MANAGEMENT INTRODUCTION TO LOGISTIC AND SUPPLY CHAIN MANAGEMENT SIMULATION OF E-COMMERCE LOGISTICS PARK Group: 12 Advisor: Assoc. Ho Thi Thu Hoa Student name & ID Nguyen Duy Thien - IELSIU22302 Trieu Kim Thanh - IELSIU22297 Nim Tien Dat - IELSIU22313 Tran Nguyen Khanh Nhan - IELSIU22301 Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 Ho Chi Minh city, Viet Nam August - 2023 Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 ACKNOWLEDGEMENT For this project, we would like to express our gratitude and appreciation to all those who were inspired in helping to complete this report. Special thanks are due to our advisor Assoc. Ho Thi Thu Hoa whose help, sharing her suggestions, documents, major knowledge, and encouragement helped us in all-time in running this project and in writing this report.
I also sincerely thank you for the time you spent proofreading and correcting our many mistakes. I also would like to acknowledge with much appreciation the crucial role of our teaching assistant Mrs. Doan Thuy Nha, who helped us to learn how to use and simulate with Arena, proofreading our logical process of this simulation. Many profound thanks go to all our teammates Nguyen Duy Thien, Tran Nguyen Khanh Nhan, Nim Tien Dat, and Trieu Kim Thanh who dedicate their time together and contributed to this simulating project.
II Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 ABSTRACT After Covid - 19, e-commerce has witnessed booming changes when Vietnamese customers tend to do more shopping online than ever. This forces Vietnamese logistics to develop more rapidly to adapt to the increase in the shopping-online demand of customers. And one critical factor for any logistics enterprises who want to grasp these opportunities to be successful in this fierce competition is the application of technologies in logistics and supply chain management activities - E- logistics. In addition to satisfying the demand of consumers, time is considered a major problem when consumers now desire to receive their orders in a short time (in a few hours or 1-2 days); therefore, an effective classification system must be generated to respond to this need and a standouts sortation systems that can be mentioned is Lazada Logistics Park sortation center.
In this project, we are going to simulate a sortation of an e-logistics enterprise – Lazada Logistics Park which has been witnessed as a milestone in the Logistics and Supply Chain Management industry of Vietnam in recent months. Our main targets are to use Arena (simulating software) and illustrate the performances of sorting activities in this center. Besides that, this project is also designed to provide us with preliminary knowledge relating to Logistics, which leads us to an overview of this developing industry. This involves the process of collecting information about the functions of the company (machines working, human resources) and data, the simulating processes, and running our simulations.
Several methods and processes involved are conceptual design, data collection, data analysis, and simulation. Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 This simulation project is designed to provide the students in this major with an overview of a modern new sorting center which is seen as an adaptation for the changes occurring in Vietnamese E-logistics; we also hope that this simulation project can provide insights into the relationship between e-sellers and customers. Keywords: E-commerce, E-logistics, Lazada Logistics, Simulation, Lazada Logistics Park, Sortation Center. Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 LIST OF TABLES Table 1.
Difference between traditional and e-logistics. Data of dimension of parcels. Data of time of processes. Table of the description of the models used in Arena.24 Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 LIST OF FIGURES Figure 2.
Lazada Logistics Park in overview. Automated system in the center. General In-out. Detail In-out.
Inbound segment and manual procedure. Sortation Arena model – a…. Sortation Arena model – b…. The simplified layout inside Lazada Logistics Park….
Result of Arena. Animation in Arena. The average amount of time that Vietnamese consumers stayed when accessing mobile–based e-commerce websites or sales applications from 2016 to 2017…. Vietnamese e-commerce marketplace’s revenue from 2015 to 2019 (Billion USD).34 Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 Figure 3.
Vietnamese e-commerce marketplace’s revenue from 2017 to 2022 (Billion USD). The distributions of types of products bought online. The rank of E-commerce companies in June 2023.43 Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 LIST OF ABBREVIATIONS DWS Dimension-weight scanner 3D 3 dimensions 3PL Third-party logistics cm Centimeters kg Kilograms VECOM Vietnam E-commerce Association FMCG Fast Moving Consumer Goods Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 TABLE OF CONTENTS ACKNOWLEDGEMENT.III LIST OF TABLES.V LIST OF FIGURES. VI LIST OF ABBREVIATIONS.VIII TABLE OF CONTENTS.IX CHAPTER 1 - INTRODUCTION.
SCOPE AND LIMITATIONS.4 CHAPTER 2 - SYSTEM DESCRIPTION. General In-Out. 15 Downloaded by mon hon (monmon1@gmail. 31 CHAPTER 3 - SOLUTION DEVELOPMENT.
Case 1: Before the Covid-19 pandemic. Case 2: After COVID–19 pandemic. The change in shopping online behavior of customers after COVID–19. The distribution of types of products.
Challenges of Vietnam e-commerce. 50 Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 CHAPTER 1 - INTRODUCTION 1. Rationale ● Overview of E-logistics in the World: With the rapid growth of electronic commerce (E-commerce), there is an enormous increase in the demand for customers that are difficult to predict and sensitive to price and service levels [Wang et al, 2004] with shrinking shipment size. This development also shifts a significant change in the presented logistics which is now becoming E-commerce Logistics.
E-commerce Logistics (or E-logistics) is presented as logistics concepts applied through Internet use and it means necessary processes for supporting the acquisition of material, warehousing, and transportation and enables distribution through routing optimization with inventory tracking. Song and Hu [2004] studied the differences between traditional and e-logistics and the results of their research are summed up in Table 1.1: Difference between traditional and E-logistics Source: Song and Hu [2004] 1 Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 Having mentioned above, the growth of e-commerce leads to a significant increase in shipped parcels in recent years, and the fact that the parcel service industry has become one of the fastest-rising segments of logistics services. However, to deliver the right parcel to the right place, the process of gathering parcels from different places and distributing them to the precise location also plays an important role in the parcel service industry. This process is known as Sortation and a place where all activities of this segment occur is known as Sortation Center (Sortation Hub), and its goal is to classify items according to their destination and move different items to the corresponding output ports.
Some corporations integrate sortation segments in their distribution centers while others also open a specific sortation center. The most stand-out company that we can mention is Amazon, which has extended its fulfillment centers by adding sorting centers that sort packages into zip code orders for faster delivery by the U. Moreover, in Vietnam, the recent sortation center of Lazada in Binh Duong which is able to sort 1 million parcels per day has been observed as an important step forward in Vietnam’s E-commerce logistics industry. ● Overview of E-logistics in Vietnam: In Vietnam, the concept of E-logistics is still new.
By comparing e-logistics with the traditional logistics field in Vietnam, we can see the biggest difference is that while most of the order processing and traditional logistics quotes in Vietnam are done manually, e-logistics wants the implementation of procurement and fulfillment handled by information technology. Processes in e-logistics are automated to satisfy millions of orders per day, and delivery progress within 1-2 hours or in a day. 2 Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 According to the Ministry of Industry and Trade, in 2017, there were 50 enterprises providing e-logistics services. Up to 2022, the number reached more than 3000 enterprises registered to operate in the logistics segment, of which 89% are domestic enterprises, 10% are joint venture enterprises and 1% are foreign enterprises.
Problems While a growing sector, the Lazada Logistics Park is not without its share of challenges. E-commerce is developing more rapidly than ever, which goes hand in hand with the increase in the demand of consumers. Albeit the fact that Lazada Logistics Park is one of the best sorting centers currently, it does not ensure that: 1. With the increase in the demand of Vietnamese consumers, can Lazada Logistic Park be still an effective hub in the future, especially when the customers’ behavior is changing unpredictably after the COVID-19 pandemic? 2.
With the number of technologies now, is it possible to fulfill the need of customers after COVID–19 when e-commerce is developing rapidly? These are two principal problems relating to the relationship between the hub and consumers that we take into account. Objectives In this simulation project, we will use a simulation software – Arena to simulate the activities inside the sorting hub of Lazada. After simulating the model of this sortation center, we desire our model to be able to illustrate performances and functions inside the center. Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 Besides that, we want to demonstrate the relationship between the sortation center with e-commerce in general and with e-sellers (individuals or enterprises) in specific.
Scope and limitations 1. Scope In a practical sorting hub, the main activities around the hub are bringing packages after collecting from e-sellers along Vietnam for sorting processes into batches for delivery work later on, which can be a direct delivery to 4 Lazada receiving hubs located in Ho Chi Minh city (located in District 11, District Go Vap, District 1, and District 7 respectively) and then bring it to Ho Chi Minh City consumer’s doors. The data of Lazada Logistic Park that will be used in this report is recorded as average in one day (which are: the sizes of parcels, the number of parcels arriving at the hub in one day, and the time difference between parcels) and comes from mainstream newspapers, published information on Lazada’s websites and practical observation from the enterprise. Limitations A number of limitations in simulating a particular sorting hub that can be covered through are unable to access practical data and statistics that are practical and objective to the actual market’s situation.
Moreover, the narrowing of the market range is a noticeable detail in understanding and simulating the hub correctly. Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 Therefore, the missing assurance of the resemblance to practice is also a major drawback in this project, as well as the lack of time in the making and simulating of the project. Nevertheless, the sample size is too small in order to cover a massive number of the practical flow of packages every day and everywhere. Difficulties in reflecting the entire project in an exact process are considerable due to the purpose of simulating the project and the missing needed information from the sorting hub.
Moreover, the data used in this project will lack accuracy since many data can only be observed by assumptions. A noticeable detail is the weight scanners, in which parcels went through them during simulation cannot be scaled dimensionally due to the limitation of the computing system. Downloaded by mon hon (monmon1@gmail.com) lOMoARcPSD|39211872 CHAPTER 2 - SYSTEM DESCRIPTION 2. Conceptual design ● Overview of Lazada Logistics Vietnam: Lazada Logistics Vietnam, a member of Lazada Corporation, is the pioneer in Vietnamese E-logistics with the application of technologies in logistics activities, offers a diversity of logistics solutions, and is a credible partner of brands and e- sellers in Southeast Asia.
During the previous decade, the logistics networks of Lazada Logistics Vietnam have reformed the background of E- commerce. With the target of offering comprehensive logistics services based on the technological foundation and continuous innovation, Lazada Logistics Vietnam always commits to improving and enhancing Logistics services, and providing customers with optimal, effective solutions.
