Driving sustainable excellence in Vietnam's manufacturing: A lean–digital–green transformation journey

At the 2025 High-Performance Machining Summit, Mr. Pham Minh Thang—Vice President and Head of Training & Consulting at the Vietnam Association for Supporting Industries (VASI)—delivered an inspiring session outlining how Vietnamese SMEs can achieve Sustainable Operational Excellence through an integrated transformation approach built on Lean, Digital, and Green pillars.

The VASI Ecosystem and Vision

VASI, a non-governmental and non-profit organisation, currently represents more than 460 member companies across Vietnam’s manufacturing and supporting industries. These members are active in sectors such as metalworking, automation systems, electronic components, plastics, rubber, molds, fixtures, materials, and software solutions. With its core mission of enhancing competitiveness, VASI has launched several initiatives to support members in overcoming operational challenges and upgrading their manufacturing capabilities.

One such initiative is the Lean Transformation Network, established on June 15, 2022, with five pioneering enterprises. Led by P&Q Solutions and sponsored by VASI, this network promotes collaborative transformation by enabling enterprises to implement lean practices while building foundations for broader digital and green advancements.

Challenges in the Current Manufacturing Landscape

Mr. Thang acknowledged that while companies have achieved notable progress—particularly through initial lean transformation efforts that delivered over 20% annual efficiency improvements—Vietnamese manufacturers still face significant barriers. Many initiatives related to automation and digitalisation remain fragmented, implemented in silos without a cohesive strategy. Companies are also in the early stages of responding to supply chain demands for greenhouse gas (GHG) emissions and ESG reporting, with most beginning with small-scale renewable energy projects like rooftop solar installations.

Moreover, the operational and financial indicators used within companies are not standardised or suitable for benchmarking, which makes cross-company comparisons difficult. Many transformation projects tend to be solution-driven, following a “push” approach, rather than being guided by specific problems and a strategic “pull” approach. This misalignment has often led to inefficiencies and limited returns on investment.

Introducing the 5-Element Lighthouse Model

To overcome these obstacles, Mr. Thang introduced VASI’s 5-Element Lighthouse Manufacturing Model, which provides an integrated and balanced framework for transformation. At the core of this model is Lean Manufacturing and Management Systems, serving as the foundation that ensures efficient operations and waste elimination.

Complementing this foundation is a Productivity Measurement System, which supports benchmarking and provides a structured way to monitor performance. The model also emphasises the importance of automation and digitalisation, not as ends in themselves but as tools to address prioritised business challenges and support scalable growth.

Additionally, the model incorporates ESG strategies that move companies from a mindset of compliance to one of value creation through green growth. Finally, it highlights the need for leadership development, equipping managers at all levels to drive and sustain transformation efforts.

Together, these five elements form a practical roadmap for Vietnamese SMEs aiming to boost productivity, competitiveness, and sustainability.

Real-World Impact: Case Study of a Vietnamese Machining Enterprise

To demonstrate how the model works in practice, Mr. Thang shared the case of a precision machining company based in Bac Giang, Vietnam. The company specialises in metal parts for machinery and supplies to both foreign direct investment (FDI) clients in Vietnam and export markets, particularly in the semiconductor sector. Operating 24 hours a day, six days a week, the company generates approximately US$10 million in revenue.

Their transformation journey started with lean improvements on the shop floor and later expanded to the entire enterprise. This included efforts to improve Overall Equipment Effectiveness (OEE), implement in-process and online quality control using advanced measurement tools, and deploy digital dashboards via Power BI. The company also rolled out an ERP system, introduced systems for energy and GHG tracking, and invested in rooftop solar energy as part of its renewable energy goals.

At the same time, they adopted a KMI–KPI–KAI framework to better align key metrics, measure leadership effectiveness, and drive accountability. The development of a clear leadership roadmap and training program allowed them to qualify two senior project managers and three project managers.

The results were impressive: the company’s operating profit increased by 50%, labor productivity rose by 25%, and machine productivity improved by 15%. Energy consumption per unit dropped by 12% due to productivity enhancements, and by the end of 2024, the company expects to replace 14% of its energy usage with renewables through a 0.5 MWh solar project. In addition, leadership capability—measured by scorecards—improved by 25% on average among team leaders.

A Collaborative Way Forward

Mr. Thang concluded his presentation by emphasising the importance of ecosystem collaboration. VASI is promoting the creation of an alliance that acts as a “research lab” and “learning network,” uniting manufacturers, solution providers, and business support organisations in a shared mission of total enterprise transformation. This integrated, multi-disciplinary approach allows for scalable learning, cross-sector deployment, and sustainable innovation based on real-world business challenges.

Conclusion

As Vietnam accelerates its journey toward becoming a global manufacturing leader, initiatives like VASI’s Lean–Digital–Green transformation framework offer a clear, practical path forward. Through structured collaboration, leadership development, and strategic use of technology and data, Vietnamese SMEs are well-positioned to achieve both operational excellence and sustainable growth.

Source: Ringier Events