FAILURES IN LOGISTICS MANAGEMENT OF VINALINK’S LOGISTICS DEPARTMENT AND RECOMMENDATIONS

I
NATIONAL ECONOMICS UNIVESITY
ENGLISH FOR BUSINESS DEPARTMENT
FACULTY OF FOREIGN LANGUAGES

¬
LE THI THUY LINH
INTERNSHIP report
Topic:
FAILURES IN LOGISTICS MANAGEMENT OF VINALINK’S
LOGISTICS DEPARTMENT AND RECOMMENDATIONS

Hanoi- 5/2010
I
NATIONAL ECONOMICS UNIVESITY
ENGLISH FOR BUSINESS DEPARTMENT
FACULTY OF FOREIGN LANGUAGES

¬
LE THI THUY LINH
INTERNSHIP report
Topic:
FAILURES IN LOGISTICS MANAGEMENT OF VINALINK’S
LOGISTICS DEPARTMENT AND RECOMMENDATIONS
Field: English for Business Studies
Code: 701

Supervisor: MS. NGUYEN PHUONG HOAI, M.A
Hanoi- 5/2010
II
ACKNOWLEDGEMENTS

This study is completed not as the result of my personal effort but the outcome
of enthusiastic support and contribution from many people involved in my internship
process.
Therefore, I would like to thank Ms. Trần Thị Thu Giang, Dean of Faculty of
Foreign Languages for giving me the opportunity to conduct this study. I am also
delighted to give my sincere recognition and appreciation to Ms Nguyễn Phương
Hoài for her constant help with academic knowledge and her support during the time
I complete my report.
I would also like to express my gratitude to Vinalink International Freight
Forwarders particularly Logistics Department-Ha Noi Branch for allowing me to do
internship in the company. I especially owe my thanks to people who directly
instructed me who are Mr. Nguyễn Quốc Vương, Manager of Logistics Department
and other officials of the department.
Once again, I deeply appreciate all the great support that I received during my
internship.
III
EXECUTIVE SUMMARY
This report provides an analysis on the failure of Logistics Department-Ha Noi
Branch of Vinalink International Freight Forwarders in terms of logistics
management.
Data collected through methods of observation, horizontal and vertical analysis
of revenue, growth and proportion shows that revenue of Logistics Department has
moderate increase over the time. However, the rate of revenue which Logistics
Department contributes to the total number of the whole branch is rather low despite
the fact that logistics is one of the most popular services recognized by Vinalink’s
customers and partners. Its revenue contribution is outnumbered by those of Air and
Sea Departments.
This situation is the result of inefficient logistics management. Its management
failures are shown the most clearly in two of its revenue generating sources:
warehouse and freight transport.

Therefore, a management reform is the key solution to help Logistics
Department overcome its drawbacks and attain greater competitive strength among
other departments of Ha Noi Branch.
Recommendations discussed in this report include:
•Improve warehouse management
•Improve freight transport management
IV
INTRODUCTION
Rationale
Together with the growth of Vietnam’s economy in general and business sector
in particular, the need for exchanging and transporting goods is getting greater and
greater. Logistics has appeared to fill this market gap. In transport context, logistics is
referred to as the planning, organization, management, execution and control of
freight transport operations which determines the efficiency of freight transport. Up to
now, logistics has become a business with the emergence of new companies as well
as specialized departments within existing transport organizations.
Vinalink International Freight Forwarders (Vinalink) is a long-time player in
this business. Since its establishment in 1999, Vinalink has provided logistics services
in combination with its International transport services and from 2002 these services
have been managed by specialized departments in Ha Noi, Hai Phong and Ho Chi
Minh City. Among those three departments, Logistics Department of Hanoi Branch
has become a popular provider of these services. However, as a specialized
department with its own management Logistics Department has failed to prove its
role in revenue contribution into the total number of the whole office in comparison
with other departments such as Sea and Air Departments. This results from its
inefficient management. Therefore, in this study, I analyzed some drawbacks of
Logistics Department in terms of logistics management from which I could draw
some recommendations to solve the situation.
Methodology
In this report I based on three main research methods to present my ideas and

arguments, which are observational method, quantitative method and descriptive
method
Research questions:
My report gives answers to the following questions:
- What are issues of logistics management?
- What are Logistics Department’s failures in logistics management?
- How can Logistics Department improve its management?
Sources and method of data collection
V
Analysis in my report primarily based on secondary data such as statistics of
revenue, rates of revenue, growth and organizational records. The data was collected
through observation, Vinalink’s performance reports and minutes of meetings.
VI
TABLE OF CONTENT
CHAPTER
1
2
3
4
TITLE PAGE
Title page.....................................................................................................I
Acknowledgement.....................................................................................II
Executive summary.................................................................................III
Introduction.............................................................................................IV
Table of content.......................................................................................VI
Main chapters.............................................................................................1
Introduction of Vinalink International Freight Forwarders and
Logistics Department ...............................................................................1
1.1.Vinalink International Freight Forwarders’ background........................1
1.2. Logistics Department’s background......................................................3

1.3. Logistics Department’s performance.....................................................4
Literature review.......................................................................................7
2.1. Logistics................................................................................................7
2.2. Logistics management...........................................................................8
2.2.1. Warehouse management.................................................................8
2.2.1.1. Use of building space................................................................8
2.2.1.2. Minimum movement..............................................................10
2.2.1.3. Control and information system.............................................10
2.2.1.4. Product integrity.....................................................................11
2.2.1.5. Working condition and safety.................................................11
2.2.2. Freight transport management......................................................11
2.2.2.1. Choice of transport modes......................................................11
2.2.2.2. Scheduling and routing control...............................................13
2.2.2.3. Fleet management...................................................................13
Analysis and findings...............................................................................15
3.1. Warehouse management......................................................................15
3.1.1. Warehouse design and layout.......................................................15
3.1.2. Information and communication system......................................17
3.1.3. Working condition and safety.......................................................18
3.2. Freight transport management.............................................................18
Recommendations....................................................................................21
VII
4.1. Warehouse management reform..........................................................21
4.1.1. Warehouse design and layout...........................................................21
4.1.2. Information and communication system..........................................23
4.1.3. Working condition and safety...........................................................23
4.2. Freight transport management reform.................................................24
Conclusion................................................................................................26
Appendix...................................................................................................28
References.................................................................................................29

CHAPTER I
INTRODUCTION OF VINALINK INTERNATIONAL
FREIGHT FORWARDERS AND LOGISTICS
DEPARTMENT
Chapter 1 provides an overview of Vinalink International Freight Forwarders’
business and after that zooms in the operation of Logistics Department of Vinalink
Ha Noi Branch to introduce its main areas of services. In addition, Logistics
Department’s performance is evaluated in order to find out its current situation.
1.1. Vinalink International Freight Forwarders’ background
Vinalink International Freight Forwarders or Vinalink for abbreviation
founded under the decision of Minister for Ministry of Trade to equitize state-owned
company, officially started its operations on September 01, 1999 as a Joint Stock
company with 10% state-owned, and 90% individual-owned, with starting capital of
VND8 billion.
Vinalink is headquartered at 145 – 147 Nguyen Tat Thanh, District 4, Ho Chi
Minh City and has branches and representative offices in Ha Noi, Hai Phong, Binh
Duong, Da Nang, Quy Nhon, Dong Nai…
Vinalink has more than 270 employees and owns over 2.500 sq m of office
building, 16.000 sq m of warehouse and open yards, over 40 prime movers, trucks
and pick-up vans, loading and unloading equipments and devices.
Vinalink’s scope of business includes:
- Freight forwarding (Seafreight and Airfreight)
- Transport services
- Logistics services
- Bonded warehouse and cargo storage services
- Shipping and Liner Agency
- GSA (General sales agent) for airlines
- Air ticket booking agency
- Import - export and trading business
- Infrastructure investment and real estate business

1
As a trustworthy partner of cooperation Vinalink has achieved membership of
honorable associations of freight forwarders as well as economic organizations such
as Vietnam Freight Forwarders Association-VIFFAS, International Federation of
Freight Forwarders-FIATA, American Moving and Storage Association-AMSA and
Vietnam Chamber of Commerce and Industry-VCCI…
Vinalink Ha Noi Branch
Vinalink Ha Noi Branch was launched on January 1
st
, 2005 at No.2 Bich Cau
Street, Dong Da District, Ha Noi. In 2006 its office was moved to level 6, Lang Ha
Builiding, Ba Dinh District, Ha Noi. Until the end of the year 2009, Ha Noi Branch
had 70 employees working in 6 departments. The organizational structure of Ha Noi
Branch is described in Figure 1.
Figure 1: Organizational structure of Ha Noi Branch
Ha Noi
Branch
Ocean
Export Dept.
Ocean
Import Dept.
Airfreight
Dept.
Logistics
Dept.
Accounting
and
Administra
-tion Dept.
Hai Phong

Office
2
1.2. Logistics Department’s background
Logistics services have been provided by Vinalink since its official
establishment to assist international transport services. Since 2002, logistics services
have been separated into specialized departments in Ho Chi Minh City, Ha Noi, and
Hai Phong.
There are five main services being provided by Logistics Department consisting
of:
- Logistics services for import and export cargoes: such as custom declaration,
import export formality, project and exhibition cargoes delivery, door to door
delivery, cargoes packaging and wrapping, crating, import export consulting,
certificate of origin, insurance, fumigation, culture checking, authorized import and
export formalities, local inland transit and on forwarding from main ports to province.
- Delivery services for import cargoes: take care of distribution services
including transport to warehouse, storage, classification, unloading and loading,
delivery to required destinations or on-site, payment on behalf of shippers…
- Transport services: which include container transport and break-bulk
cargoes, office removal, factory removal, household and personal effects removal,
transport of transit cargoes to Laos, Cambodia and China.
- Warehouse and bonded warehouse services are composed of storage and
distribution, bonded warehouse services and mortgaged cargo management services
for Banks.
- Services providing to shipping lines at terminals are services related to ships
and crew, shipping boarding agency, packages tallying, containers tallying, cargoes
tallying for loading into containers, export and import consolidation and de-
consolidation operations at Container Freight Station terminals and buyer’s
consolidation.
Logistics Department of Ha Noi Branch is currently utilizing 350 sq m of
warehouse and fleet of more than10 container trucks, vans and forklifts. Logistics

Department of Ha Noi Branch is also responsible for managing logistics services
provided by Hai Phong office. Human resource of Logistics Department consists of
30 officers for different posts: 01 logistics manager and 01 representative of Hai
Phong office, 03 customer service officers, 02 documentation officers, 08 operation
officers, 01 accountant, 03 transporters and 11 drivers (01 in Ha Noi and 10 in Hai
Phong).
3
1.3. Logistics Department’s performance
During two years 2008 and 2009 Logistics Department had a moderate growth
in revenue with an increase of 63.77% of the department’s total revenue. Container
trucking accounted for the greatest proportion of revenue contributing to the total and
was the sector with the most remarkable growth in two years which nearly doubled its
revenue in 2009. Other sectors also had tender rise in revenue except for railway
sector which lost more than half of its revenue in 2009. Detailed information is shown
in Table 1.
Table 1: Logistics Dept.’s Revenue 2008-2009 (Unit: USD)
Implemented
year
Sector
2008 2009 Growth
(2009/2008)
Warehouse 12,458.43 20,078.96 161.17%
Inland Ha Noi 10,455.86 12,749.97 121.94%
Inland Hai Phong 28,791.84 49,289.41 171.19%
Railway 10,846.21 4,131.82 38.09%
Container trucking 44,499,51 88,996.52 199.99%
Total 107,041.50 175,306.14 163.77%
Logistics Department contributed its revenue into the total number of the whole
branch by 21.09% in 2008 and 26.49% in 2009. Although Logistics Department had
rising proportions of revenue contribution from 2008 to 2009 it still lost the biggest

share to Airfreight Department in 2008 and Ocean Import Department in 2009. That
information is presented in Table 2, Figure 2 and Figure 3
4
Table 2: Ha Noi Branch Revenue 2008-2009 (Unit: USD)
Implemented year
2008 2009
Revenue
(USD)
Proportio
n
(%)
Revenue
(USD)
Proportio
n
(%)
Airfreight 171,206.44 33.74 203,101.00 30.68
Ocean Import 146,769.66 28.93 211,149.48 31.89
Ocean Export 82,431.16 16.24 72,459.98 10.94
Logistics 107,041.50 21.09 175,306.14 26.49
Total 507,448.76 100.00 662,016.60 100.00
Figure 2: Revenue contribution 2008 by departments
Figure 3: Revenue contribution 2009 by departments
There may be many reasons for Logistics Department situation, one of those is
inefficient management which will be analyzed as the focus of this report. The
following chapters of my report aimed at finding the answers to some questions:
- What are issues of logistics management that contribute to performance
and result of logistics organizations?
5
33.74%4

28.93%
21.09%
16.24%
30.68%
31.89%
26.49%
10.94%
- What practices of logistics management did Logistics Department Ha
Noi Branch fail to apply? What was the consequence of its failure?
- How can Logistics Department improve its logistics management to
overcome the problems?
Research methodology and methods of data collection
This report used observational method to observe and record how management
tasks are performed by Logistics Department in order to point out some drawbacks
emerging in the middle of its operation process. Basing on quantitative method, it
analyzed numerical statistics from the company’s performance reports and minutes of
internal meetings such as its revenue, rates of revenue to draw a clear picture of
Logistics Department’s situation concerning its growth, position and competitive
strength among other departments. Moreover, carried out as a descriptive research,
this report aims at identifying the underlying causes leading to Logistics Department
weaknesses from which proper recommendations can be given out.
Scope of the research
This report analyzes failure of Logistics Department - Hanoi Branch of Vinalink
International Freight Forwarders in logistics management, focusing on two aspects
which are the main profit-generating sources of Logistics Department: warehouse
management and freight transport management. These two aspects are discussed at
length throughout literature review, analysis and recommendation chapters.
In the close-up of the performance of Logistics Department, some problems in
logistics management have arisen. In the latter part of my report, I will introduce the
theoretical framework for logistics management on which I can draw a clear picture

for the department situation, especially its failures in applying management principles
which result in its current weaknesses.
6
CHAPTER 2
LITERARURE REVIEW
Chapter 2 presents the theoretical framework for analyses and arguments of my
report. It is responsible for answering the question about management issues which
contribute to performance of logistics organizations. It is also the guide to instruct the
building of effective logistics management strategies.
2.1. Logistics
The term “logistics” originates from the ancient Greek word “logos” – “ratio,
word, calculation, reason, speech, and oration”. And “Logistikas” was the title of
ancient Greek military officers who were responsible for financial and supply
distribution matters. By the time the term is more and more widely used in many
aspects beyond the boundary of military activities. Nowadays, the most general
definition of “logistics” is:
“Logistics is the management of the flow of goods, information and
other resources, including energy and people, between the point of origin and
the point of consumption in order to meet the requirements of consumers”.
(Wikipedia)
However it is not easy to have complete understanding of “Logistics” because
its definition varies in different aspects. In the context of transport which is the scope
of my research the term “logistics” should be understood as follows:
“Logistics is the strategic management movement, storage and
information relating to materials, parts and finished goods in supply chains,
through the stages of procurement, work-in-progress and final distribution. Its
overall goal is to contribute to maximum current and future profitability
through the cost effective fulfillment of customer orders.” (Cooper, ed, 1994)
“Logistics is… the positioning of resource at the right time, in the
right place, at the right cost, at the right quality.” (UK Institute of Logistics and

Transport, 1998)
“Logistics is the efficient movement of finished product from the end
of the production line to the consumer, and in some cases includes the
7