Driving Digital Transformation in Vietnam’s Mechanical Supporting Industry

However, the participation of supporting industry enterprises in the mechanical industry in the global supply chain remains low. Digital transformation is an inevitable trend to help the Vietnamese mechanical industry enter a new development stage, optimize internal capacity, and participate in the global supply chain.

Opportunities for supporting enterprises in mechanical industry

In recent years, the mechanical industry has made significant progress, contributing about 15-20% of GDP in the manufacturing sector. According to a report by the Vietnam Chamber of Commerce and Industry (VCCI), Vietnam’s mechanical engineering market is estimated to exceed US$300 billion by 2025, mainly from construction, automobiles, machinery, and electronic equipment manufacturing. The growth of the construction, energy, and transport infrastructure sectors also drives the mechanical engineering industry. However, Dr. Le Ky Nam, Vice President and General Secretary of the Vietnam Association of Mechanical Enterprises (VAMI), noted that most supporting industry enterprises in Vietnam are small and medium-sized, making it difficult to access capital and modern technology. Outdated technology and a heavy reliance on imports, with up to 90% of mechanical components imported, lead to dependence on external supply and challenges in improving domestic production capacity. Over 70% of equipment and machinery must also be imported, limiting the industry's technological self-sufficiency. Data from the Ministry of Industry and Trade shows that the sector’s core technologies remain at a low average level, hindering competitiveness against regional countries like Thailand and Malaysia.

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Dr. Le Ky Nam said digital transformation helps mechanical engineering enterprises enhance global competitiveness, optimize production processes, increase productivity, and reduce costs. Technologies such as the Internet of Things (IoT), data analysis, and artificial intelligence (AI) improve enterprise competitiveness in the context of global integration, enabling them to meet international standards and participate more deeply in the global supply chain.

Digital transformation technologies, such as supply chain management systems (SCM) and manufacturing execution systems (MES), help enterprises track raw materials, control quality, and reduce waste. This enables them to optimize costs, improve operational efficiency, meet market demand in a timely manner, and minimize the risk of supply disruptions.

In addition, digital transformation helps mechanical engineering enterprises develop smart and personalized products, opening up opportunities for on-demand production and meeting the diverse, increasingly high demands of customers. Computer-aided design (CAD), 3D simulation, and 3D printing systems accelerate research and development while allowing enterprises to test and refine products based on personalized customer requirements. Enterprises with digital transformation capabilities are also better positioned to attract investment and international cooperation thanks to transparent management, optimized production processes, and stable product quality.

Globally, many mechanical enterprises have successfully applied digital transformation, including General Electric (GE). GE has invested heavily in digital technology and IoT to modernize its production process, using the Predix platform to collect and analyze data from machinery and equipment in its factories. Digital transformation has helped GE improve predictive maintenance, reduce machine downtime, and optimize production processes, resulting in significant cost savings and increased operational efficiency.

Bosch has also deployed IoT solutions in its manufacturing plants, using sensors to collect data and analyze machine performance. The company has developed digital applications to optimize production processes and quality management. These solutions have helped reduce waste, increase production efficiency, and improve product quality. Bosch has also applied AI technology to enhance maintenance and production processes.

These examples demonstrate the success of digital transformation in the mechanical industry, not only improving production efficiency but also creating added value for businesses and customers.

Clear digital transformation planning

Although the benefits of digital transformation are clear, Vietnamese mechanical engineering enterprises still face many challenges. According to Dr. Le Ky Nam, digital transformation requires a workforce with strong technology skills, digital capabilities, and adaptability. However, most workers in Vietnam’s mechanical engineering industry have limited qualifications and skills, making it difficult to access and adopt new technologies.

In addition, high investment costs and long payback periods pose major obstacles. Small and medium-sized mechanical enterprises often struggle to secure capital for digital transformation projects. Many enterprises also lack knowledge and understanding of digital technologies and how to develop long-term strategies, resulting in difficulties with orientation, technology selection, and effective implementation.

Enterprises also lack the technical infrastructure needed to deploy complex digital transformation solutions. Additionally, barriers such as corporate culture, cybersecurity risks, and limited support from the domestic technology ecosystem make digital transformation extremely difficult to implement.

These challenges require mechanical enterprises to be well-prepared and develop clear digital transformation plans, with support from the government and industry organizations. According to Dr. Le Ky Nam, enterprises must first establish internal training programs and cooperate with training centers to enhance digital skills for their workforce. They also need to assess their current situation and identify priority areas for transformation. From there, enterprises should build a specific digital transformation strategy with clear goals, a defined roadmap, and a suitable budget. Rather than transforming all at once, enterprises can divide projects into stages, making it easier to manage, evaluate effectiveness, and make timely adjustments.

Enterprises also lack the technical infrastructure needed to deploy complex digital transformation solutions. Additionally, barriers such as corporate culture, cybersecurity risks, and limited support from the domestic technology ecosystem make digital transformation extremely difficult to implement.

These challenges require mechanical enterprises to be well-prepared and develop clear digital transformation plans, with support from the government and industry organizations. According to Dr. Le Ky Nam, enterprises must first establish internal training programs and cooperate with training centers to enhance digital skills for their workforce. They also need to assess their current situation and identify priority areas for transformation. From there, enterprises should build a specific digital transformation strategy with clear goals, a defined roadmap, and a suitable budget. Rather than transforming all at once, enterprises can divide projects into stages, making it easier to manage, evaluate effectiveness, and make timely adjustments.