Role of BTS and Smart Warehouses in Transforming Supply Chains

In 2024, Hai Phong's GRDP growth is projected to reach 11.01%, ranking third nationwide. On December 4, the Deputy Prime Minister approved the establishment of the 20,000-hectare Southern Coastal Economic Zone, leveraging Hai Phong’s position as an international gateway. The zone prioritizes sustainable, multi-sector development, focusing on high-tech industries, modern port services, and advanced logistics.

Hung Yen, meanwhile, ranked 9th in the first eight months of 2024 for FDI, with $0.59 billion in registered capital. It has become a key investment destination, particularly for Japanese manufacturers establishing innovative operations.

Paul Tonkes, Deputy Managing Director of industrial real estate, Indochina Kajima Development Company (ICCK), said these regions benefit from robust infrastructure, including modern ports and airports, positioning them as strategic hubs for industrial and economic development in Vietnam. In this evolving landscape, Build-to-Suit (BTS) factories and smart warehouses are poised to drive significant changes in supply chain operations. However, the full potential of these solutions is currently limited by several challenges.

Current State and Growth Potential of BTS

Despite the increasing demand for custom-built facilities, BTS factories remain relatively rare in Vietnam. Several factors contribute to this scarcity, including legal hurdles, the high risk associated with custom builds. The positive effect to that is the availability of approximately 2.5 million square meters of Ready-Built Factories (RBF) in these regions provides a better solution for the current high-velocity shift of production. The extensive network of ready-built factories has played a crucial role in facilitating the "China1" strategy, enabling businesses to diversify their production bases and improve supply chain efficiency and that manifests in an occupancy rate of more than 90%.

“As foreign direct investment (FDI) levels stabilize, demand for BTS factories is expected to rise. To meet this demand, land use planning will need to integrate both RBF and BTS solutions, supported by tools like supply chain heatmaps, phased land development plans, and a nationwide industrial zone ranking system”, said Paul Tonkes.

Advantages of BTS and Smart Warehouses

Customization and Performance Optimization: BTS factories are specifically designed to optimize layout and energy efficiency, while integrating advanced technologies and Industry 5.0 practices.

Improved Supply Chain Visibility: Smart warehouses equipped with Internet of Things (IoT) and Artificial Intelligence (AI) technologies enhance real-time inventory and logistics management, improving operational performance and forecasting accuracy.

Environmental Sustainability: LEED-certified designs and innovative logistics solutions help reduce carbon emissions and operational costs, contributing to sustainability goals.

Strategic Planning for the Economic Corridor

Effective supply and demand management within the Eastern Economic Corridor requires comprehensive planning and the creation of a robust supply chain ecosystem. In Mr. Paul Tonkes' opinions, future development strategies should include:

First, investment in human capital through vocational training programs to meet the growing demand for skilled labor.

Second, building platforms to connect all elements of the supply chain, from recycling to workforce recruitment.

Third, policies that encourage the development of smart factory campuses and software parks.

Towards a Smart Industrial

The Eastern Economic Corridor has the potential to become a global manufacturing and logistics hub. The integration of digital technologies will foster an ecosystem that attracts investment in high-value sectors such as semiconductors and electric mobility.

According to Mr. Paul Tonkes, the region must evolve into a fully integrated digital ecosystem. With collaboration between the government, businesses, and academia, the provinces along the Eastern corridor are well-positioned to lead the next industrial revolution. Strengthening infrastructure, developing a skilled workforce, and reducing environmental impact will ensure Vietnam’s emergence as a global centre for industry and logistics. By strategically balancing RBF and BTS solutions, Vietnam can achieve a smart and sustainable industrial climate.