FOREIGN TRADE UNIVERSITY

VJCC INSTITUTE
_________***_________

GRADUATION THESIS
Major: International Business
Specified in Japanese style International Business

STUDY ON SUSTAINABLE SUPPLY CHAIN:

EVIDENCE FROM SAMSUNG ELECTRONICS
CORPORATION DURING COVID-19 OUTBREAK

Student name : Mai Nhat Anh

Student ID : 1715520008
Class : English 7
Intake : 56
Supervisor : Assoc. Prof. Dr Nguyen Thi Thuy Vinh

Hanoi, December 2021

 TABLE OF CONTENTS
TABLE OF CONTENTS ................................................................................................ i
LIST OF ABBREVIATIONS....................................................................................... iv
LIST OF TABLES ........................................................................................................ vi
LIST OF FIGURES ..................................................................................................... vii
INTRODUCTION .......................................................................................................... 1
CHAPTER 1:THEORETICAL FRAMEWORK ON SUPPLY CHAIN AND
SUSTAINABLE SUPPLY CHAIN ............................................................................... 8
1.1. Overview of supply chain .................................................................................... 8
1.1.1. Definitions of supply chain ............................................................................ 8
1.1.2. Objectives of supply chain .............................................................................. 9
1.1.3. Structure of supply chain ............................................................................... 9
1.1.4. Roles of supply chain.................................................................................... 11
1.2. Overview of sustainable supply chain ............................................................ 12
1.2.1. Definitions of sustainable supply chain ...................................................... 12
1.2.2. Benefits of sustainable supply chain ........................................................... 13
1.3. Building sustainable supply chain requirements ............................................ 15
1.3.1. Establishing a sustainable strategy .............................................................. 15
1.3.2. Retooling the organization ........................................................................... 16
1.3.3. Managing supplier relations ........................................................................ 16
1.4. Sustainable supply chain measurement indicators......................................... 17
1.4.1. Environmental sustainability indicators...................................................... 18
1.4.2. Social sustainability indicators .................................................................... 19
1.4.3. Economic sustainability indicators .............................................................. 21
CHAPTER 2: SUSTAINABLE SUPPLY CHAIN OF SAMSUNG ELECTRONICS
CORPORATION DURING COVID-19 PANDEMIC ............................................. 23
2.1. Overview of Samsung Electronics Corporation and Samsung Electronics
Vietnam ...................................................................................................................... 23
2.1.1. Introduction of Samsung Electronics Corporation and Samsung
Electronics Vietnam ............................................................................................... 23
2.1.2. Core businesses ............................................................................................. 24
2.1.3. Mission, vision and business principles....................................................... 26
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2.2. The sustainable supply chain of Samsung Electronics Corporation ............ 27
2.2.1. Structure of Samsung Electronics Corporation’s supply chain ................. 27
2.2.1.1. Procurement process ............................................................................... 28
2.2.1.2. Production process .................................................................................. 28
2.2.1.3. Distribution process ................................................................................ 29
2.2.1.4. Other primary activities .......................................................................... 32
2.2.1.5. Supportive activities................................................................................ 35
2.2.2. Economic indicators of Samsung Electronics Corporation’s supply
chain ........................................................................................................................ 36
2.2.3. Social indicators of Samsung Electronics Corporation’s sustainable supply
chain ........................................................................................................................ 39
2.2.3.1. Workplace health and safety ................................................................... 39
2.2.3.2. Human resources development ............................................................... 40
2.2.4. Environment indicators of Samsung Electronics Corporation’s sustainable
supply chain ............................................................................................................ 42
2.2.4.1. Greenhouse emissions ............................................................................. 42
2.2.4.2. Energy efficiency .................................................................................... 44
2.2.4.3. Waste management ................................................................................. 44
2.2.4.4. Water management ................................................................................. 46
2.4. Impacts of Covid-19 on a supply chain ............................................................ 47
2.4.1. Impacts of Covid-19 on consumer behaviors .............................................. 47
2.4.2. Impacts of Covid-19 on production activities .............................................. 48
2.4.3. Impacts of Covid-19 on transportation and logistics activities ................... 49
2.4.3.1. Traffic control measures ......................................................................... 49
2.4.3.2. Increase in transportation cost ................................................................ 50
2.4.4. Impacts of Covid-19 on sustainable supply chain management ................ 52
2.5. Benefits of Samsung Electronics Corporation’s sustainable supply chain
during Covid-19 outbreak ........................................................................................ 52
2.5.1. Higher socio-economic and environmental value ...................................... 52
2.5.2. Higher employees satisfaction ..................................................................... 53
2.5.3. Higher customer satisfaction ....................................................................... 54

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 2.6 Samsung Electronics Corporation’s experiences in building sustainable
supply chain during Covid-19 outbreak ................................................................. 55
2.6.1. Selecting and evaluating suppliers .............................................................. 55
2.6.2. Improving customer services ........................................................................ 56
2.6.3. Boosting CSR activities ................................................................................ 57
CHAPTER 3: RECOMMENDATIONS FOR VIETNAMESE ENTERPRISES ON
BUILDING SUSTAINABLE SUPPLY CHAIN ....................................................... 59
3.1. Characteristics of Vietnamese enterprises’ supply chain .............................. 59
3.2. Opportunities and challenges in building sustainable supply chain in Vietnam
.................................................................................................................................... 60
3.2.1. Opportunities in building sustainable supply chain in Vietnam ................ 60
3.2.1.1. Government’s support in term of sustainable supply chain development
.............................................................................................................................. 60
3.2.1.2. Increasing awareness of customers about sustainability......................... 61
3.2.2. Challenges in building sustainable supply chain in Vietnam .................. 62
3.2.2.1. Responses to huge demand ..................................................................... 62
3.2.2.2. Limits resulted from customer’s purchasing behavior ........................... 62
3.2.2.3. Limits of Vietnam corporations’ resources ............................................ 63
3.3. Recommendations for Vietnamese enterprises on building sustainable supply
chain ........................................................................................................................... 64
3.3.1. Developing the production process .............................................................. 64
3.3.2. Developing the relationship with suppliers ................................................. 65
3.3.3. Developing the relationship with distribution partners .............................. 66
3.3.4. Developing the relationship with customers................................................ 67
3.3.4.1. Emphasis on products and service quality .............................................. 67
3.3.4.2. Emphasis on CSR activities .................................................................... 67
3.3.5. Developing the relationship with labor force .............................................. 68
CONCLUSION ............................................................................................................. 69
LIST OF REFERENCES ............................................................................................. ix
APPENDIXES ............................................................................................................ixxi

iii
 LIST OF ABBREVIATIONS

ABBREVIATIONS EXPLANATION
1 3D Three dimensions
2 AI Artificial intelligence
3 ALS Aviation Logistics
4 ASGL ASG Logistics
5 B2B Business to Business
6 CSR Corporate Social Responsibility
7 DRAM Dynamic random-access memory
8 EHS Environment, Health and Safety
9 ERP Enterprise resource planning
10 GB Gigabyte
11 Gbps Billions of bits per second
12 GHG Greenhouse gas
13 GHz Gigahertz
14 GRI Global Reporting Initiative
15 GWh Gigawatt hours
16 HHP Hand-Held Phone
17 HQ Headquarters
18 IC Integrated Circuit
19 ID Identification
20 IQC Input Quality Control
21 ISO International Organization for Standardization
22 IT Information technology
23 KPI Key Performance Indicator
24 KRW South Korean won
25 LCD Liquid-crystal display

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26 LSI Large-Scale Integration
27 MB Megabyte
28 NAND NOT-AND
29 OLED Organic light-emitting diode
30 OQC Output Quality Control
31 PQC Process Quality Control
32 R&D Research and Development
33 RBA Responsible Business Alliance
34 SAIT Samsung Advanced Institute of Technology
35 SCOR Supply Chain Operations Reference
36 SDGs Sustainable Development Goals
37 SEC Samsung Electronics Company
38 SEHC Samsung Electronics Ho Chi Minh City CE Complex
39 SEV Samsung Electronics Vietnam
40 SEVT Samsung Electronics Vietnam Thai Nguyen
41 SMEs Small & Medium-sized Enterprises
42 TV Television

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 LIST OF TABLES
Table 1.1. Environmental sustainability measurement indicators ................................. 19
Table 1.2. Social sustainability measurement indicators ............................................... 20
Table 1.3. Economic sustainability measurement indicators ......................................... 21
Table 2.1. Worldwide offices classifications ................................................................. 23
Table 2.2. Core business categories ............................................................................... 25
Table 2.3. Domestic distribution channel classification ................................................ 30
Table 2.4. Overseas distributor classification ................................................................ 31
Table 2.5. Key economics performance ......................................................................... 36
Table 2.6. Sales by business division & region ............................................................. 37
Table 2.7. Economic value distribution ......................................................................... 38
Table 2.8. Ratio of economic value distribution ............................................................ 39
Table 2.9. Safety rate ..................................................................................................... 40
Table 2.10. Employment benefits package overview .................................................... 41
Table 2.11. GHG reduction activities ............................................................................ 43
Table 2.12. GHG emissions reduction rate .................................................................... 43
Table 2.13. Energy consumption ................................................................................... 44
Table 2.14. Waste management activities ...................................................................... 45
Table 2.15. Waste management ..................................................................................... 45
Table 2.16. Water management ..................................................................................... 46
Table 2.17. Air freight for cargo from Hanoi ................................................................ 51
Table 2.18. Turnover rate ............................................................................................... 54
Table 2.19. Customer satisfaction assessment ............................................................... 54

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 LIST OF FIGURES
Figure 1.1. Structure of a supply chain .......................................................................... 09
Figure 1.2. Sustainability matters index ......................................................................... 14
Figure 2.1. Structure of Samsung Electronics Corporation’s supply chain ................... 28
Figure 2.2. Socio-economic and environmental value ................................................... 53
Figure 3.1. Vietnamese monthly household income level ............................................. 63

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 ACKNOWLEDMENT

Throughout the process of conducting this graduation thesis, I am thankful to receive a

great deal of support and assistance.

First, I would like to express my genuine appreciation to the lecturers of Hanoi Foreign
Trade University for delivering valuable knowledge, which not only has great meaning
during my thesis work but also helps me to be better prepared before entering the future
workforce.

I would like to take this opportunity to express my deepest gratitude to my supervisor,

Assoc. Prof. Dr. Nguyen Thi Thuy Vinh for her valuable comments and great support
during this research work. The insightful feedback from Assoc. Prof. Dr. Nguyen Thi
Thuy Vinh has pushed me to expand my knowledge, bolster my thinking, and bring my
research to a higher level.

Furthermore, my gratitude also goes to all lectures and teaching assistants at Vietnam -
Japan Institute for Human Resources Development (VJCC) for their valuable lessons,
unreserved guidance, and continuous support.

Last but not least, I would like to thank my family and friends for always giving me
wholehearted support and encouragement so that I could make every endeavor to finish
this research.

Despite the best efforts, due to lack of knowledge, materials, and practical
understandings, the limitations of the research are inevitable. I am looking forward to
receiving comments from teachers and readers for a more complete research.

viii
 INTRODUCTION

1. Rationale of the study

In recent years, the fast-changing and dynamic global business environment requires
firms to be more flexible to quickly adapt and respond to market changes. Among the
forces that drive changes, requirements for corporate responsibility and sustainability
are getting more urgent. During the economic downturn, companies are faced with
hard choices to survive. Researches have acknowledged that addressing sustainability
issues is critical to the long-term existence and success of companies (Porter and
Kramer 2006). Understanding the utmost importance of sustainability, the United
Nations (UN) General established the 2030 Agenda for Sustainable Development in
September 2015 as a common guidance for accomplishing sustainability. This
Agenda presents 17 sustainable development goals (SDGs) and calls on all
governments and private sectors to work together to accomplish the goals (Van der
Waal and Thijssens, 2020).

Nowadays, with the aim of successfully competing in business environment with full
of fluctuations, enterprises should involve in the business of their suppliers and
customers by creating their own complete supply chain. The establishment of a
complete supply chain will provide a foundation for businesses to avoid unnecessary
costs, improve products’ added values, and raise products’ competitiveness in
comparison to competitors. It also assists domestic businesses in joining the global
value chain, thereby expanding consumer markets to all regions across the globe.
Therefore, firms are recommended to pay utmost attention to the entire flow of raw
materials, product design and packaging, supplier services, finished product
transportation and preservation, and consumer desires.

Everything completely changed due to the global spread of the Covid-19 pandemic.
The new infectious disease (Covid-19) initially appeared in China in December 2019
and quickly spread over the world, prompting the World Health Organization (WHO)
to declare it a pandemic in March 2020. (WHO, 2020). WHO has recorded a total of
267,865,289 confirmed cases of Covid-19 as of December 10, 2021, including
5,285,888 deaths in 235 countries, areas, and territories (WHO, 2021). The magnitude
of the epidemic has named the Covid-19 pandemic the worst health disaster of the
twentieth century.

The Covid-19 issue has put enormous strain on the global economy and economic
activities, resulting in large financial losses, increasing GDP losses by nations, and

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extreme poverty and hunger globally. As a result, the global health catastrophe has
slowed the international community's progress towards sustainability (Lee et al.,
2020). Barbier and Burgess (2020) suggested that Covid-19's negative effects might
endanger our capacity to fulfill 12 of the UN's 17 Sustainable Development Goals
under the 2030 Agenda for Sustainable Development. Furthermore, Leal Filho et al.
(2020) highlighted Covid-19 as a danger to sustainable development implementation
by lowering the priority of the Sustainable Development Goals. Therefore, while
considerable worldwide efforts are being made to manage this epidemic, the post-
Covid-19 era's sustainability should not be ignored.

It's no wonder that in this context, consumer behavior has altered in response to these
extraordinary times, with priority moving to areas such as health, safety, and
sustainability. Society’s expectations for sustainable business practices and
operations from the enterprises’ side also continue to increase accordingly. Therefore,
the adaptation of sustainable practices is urgently incorporated in managing the
supply chain, especially for developing countries like Vietnam.

Samsung Electronics Corporation is one of the leading corporations who is fully

aware of the importance of building sustainable supply chain. Samsung Electronics
Co., Ltd. Vice Chairman and CEO Kim Kinam clearly states in the Samsung
Electronics Sustainability Report 2020 that “As a global corporate citizen, Samsung
Electronics will continue to create environmental and social values while achieving
positive economic outcomes.”

Therefore, the thesis chooses the topic “Study on supply chain sustainability:
Evidence from Samsung Electronics Corporation during Covid-19 outbreak” to
analyze the success of Samsung Electronics Corporation in maintaining the
sustainability of their supply chain in the context of Covid-19. Meanwhile, the thesis
also aims at pointing out opportunities and threats that Vietnamese firms need to face
up to attain the goal of sustainability. Thereby, the thesis could make
recommendations for them based on a specific case of Samsung Electronics
Corporations, one of the leading and largest producers of electronic devices in the
world.

2. Literature review

Researches on sustainable supply chains are published in a vast number of journals,

books, papers, and so on. The topic's prominence has expanded dramatically over
time thus drawing more attention from both academics and practitioners in this field.
Stewart (1995) first acknowledged the need for a shift from functional-oriented to

2
integrated supply chains. According to Mentzer et al. (2001), the supply chain
concept and the role of related entities in the supply chain have grown in importance.
Even though a unified and widely accepted definition of the supply chain concept has
not been proposed, many researchers used Mentzer's definition of supply chain as a
group of three or more entities (organizations or individuals) which are directly
related to products, services, finance, and/or information from sources of supply to
final consumers.

It can be recognized that almost all researches related to sustainable supply chain
focus mainly on the sustainability of the supply chain, which represents through a
variety of aspects. Kleindorfer, Singhal, and van Wassenhove (2005) evaluate several
sustainability concepts. The authors defined sustainability as the integration
of environmental management, closed-loop supply chains, and triple-bottom-line
thinking, which incorporates profit, people, and the environment into a company's
culture, strategy, and operations. According to the authors, firms are under mounting
pressure to consider the environmental and resource implications of the goods and
services they provide, as well as the processes they use. In turn, scholars and
practitioners in operations management (OM) confront new hurdles in incorporating
sustainability problems into their conventional areas of interest. The study concludes
with some ideas for future research challenges in sustainable supply chain operations
management, focusing on three key areas: green product and process creation, lean-
and-green operation management, and closed-loop supply chains.

Different authors also place different emphases on various aspects of sustainability.

Companies and academics refer to green supply chain management or environmental
management programs when considering environmental challenges. These programs
strive to decrease detrimental environmental consequences (Brik et al., 2013). Green
purchasing, resource efficiency, eco-product design, trash management, eco-
efficiency in operations, and reverse logistics are all examples of environmental
activities (Hsu et al., 2016). Coordination among supply chain participants has been
proven to be the key to integrating environmental issues into supply chain
management (Zhu et al., 2010). Labor conditions, well-being, quality of life, equality,
diversity, and connection, both inside and beyond the community, are all linked to
social sustainability (Mani et al., 2016), with an emerging topic number on integrating
the local community into supply chain operations (Bendul et al., 2016). Finally, the
economic component is commonly assessed in terms of sales, market share, and
profitability. The thesis also considers these aspects to evaluate the sustainability of
a supply chain in general and Samsung Electronics Corporation’s supply chain in

3
particular. However, the indicators for each aspect may be different due to the actual
sustainability approaches of Samsung Electronics Corporation.

Regarding Samsung Electronics Corporation, there are various scholars and

practitioners who have been looking at Samsung Electronics Corporation as a
successful case of operating an effective supply chain.

Hong Mo Yang, Byung Seok Choi, Hyung Jin Park, Min Soo Suh và Bongsug
(Kevin) Chae (2007) introduced the application of the six sigma model for supply
chain management – a method developed and used successfully by Samsung. The
research shows that this is an effective model for Samsung, but still lacks emphasis
on sustainability of the whole supply chain.

The Chamber of Commerce of the Canadian Embassy in Korea (2012) gave an

overview of how Samsung operated its supply chain across two main areas of
information and communication, specifically focusing on the business segment;
mobile communication, and media development. However, the report above mainly
aimed at finding out opportunities for Canadian businesses to participate in
Samsung's supply chain.

In 2014, Sang Chul Jung, Professor, Department of Business Administration,

Business School, Incheon National University found out the key success factors of
strategic management of Samsung Electronics Corporation through the generic value
chain model. Professor Sang Chul Jung analyzed how Samsung transformed itself
from a mediocre OEM manufacturer based on low cost advantages to world-class
company with a strong brand and premium products. This research mentions stages
in a value chain, which includes supply chain but do not focus on this section.

Samsung Electronics Corporations (Corporate Sustainability Management Office,

Global Public Affairs) annually releases the Sustainability Report to share it
economic, social and environmental progress transparently with various stakeholders.
This report covers all of Samsung’s global worksites and supply chains. In 2021,
Samsung Electronics Corporation published the 14th Sustainability Report. In this
report, Samsung demonstrated their sustainability approaches and highlighted
outstanding sustainability achievements in various business fields. Although these
reports provide the multiple with broad and detailed understanding about
sustainability activities of Samsung, they do not focus on the way Samsung operated
and maintained the supply chain sustainability.

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Regarding the impact of Covid-19, even though the Covid-19 pandemic has only been
around for a short time, a substantial amount of Covid-19-related research has been
carried out owing to the pandemic's huge implications and ramifications for society,
the environment, and the economy throughout the world. Many scholars have studied
the impact of the pandemic on various aspects of sustainability and sustainable
development, including healthcare systems (Osingada and Porta, 2020; Sharma et al.,
2020), sustainable transition (Bodenheimer and Lei (Barreiro-Gen et al., 2020;
Hamilton, 2020), energy (Kanda and Kivimaa, 2020; Kuzemko et al., 2020), climate
change (Markard and Rosenbloom, 2020), supply chain disciplines (Chowdhury et
al., 2021), and waste management (Kulkarni and Anantharama, 2020). These
aforementioned studies have concentrated on a single topic or evaluated only one
aspect of sustainability. Furthermore, the literature in this field is particularly
fragmented due to the urgent need for action in the framework of sustainability within
a short period of time. As a result, the research lacks a full review of the Covid-19
implications for overall supply chain components.

It can be seen that the researches and studies generally mentioning or particularly
analyzing Samsung's supply chain up to now have not focused on the sustainability
of the supply chain as well as the application of Samsung’s supply chain in the
Vietnamese business environment. Therefore, the thesis chooses to research on
Samsung Electronics Corporation’s sustainable supply chain and lessons for
Vietnamese corporations today, especially in the context of Covid-19 outbreak.

3. Research objectives and questions

The thesis is conducted to analyze a successful case of Samsung Electronics

Corporation as it built and maintained sustainable supply chain even during the
Covid-19 pandemic. Hence, the thesis aims at finding out opportunities, challenges
of Vietnamese corporations as well as recommending applicable approaches for them
to head towards the sustainable development of supply chains in the long-term.

In order to attain aforementioned goals, the research aims at conduct the tasks as
below:

- Summarize and systematize theoretical framework of sustainable supply chain

- Analyze the sustainable supply chain of Samsung Electronics Corporation; its

benefits during the Covid-19 pandemic, and the corporation's experiences in building
a sustainable supply chain.

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- Analyze the current situation, opportunities and challenges of Vietnamese
corporations, and propose recommendation to build and maintain a sustainable supply
chain in the context of Covid-19.

Based on the research objectives, the thesis aims at addressing the questions as
follows:

RQ1: What is a supply chain? What are the indicators to evaluate a supply chain as
sustainable?

RQ2: How does Samsung Electronics build its sustainable supply chain?

RQ3: How has the Covid-19 pandemic impacted a supply chain? How has Samsung
Electronics Corporation taken advantage of its sustainable supply chain to maintain
business performance during Covid-19?

RQ4: How can Vietnam corporations learn from Samsung Electronics Corporation
to build a sustainable supply chain?

4. Research object and scope

Research object: The object of the thesis is the sustainable supply chain.

Spatial scope: The thesis focuses on analyzing the sustainable supply chain of
Samsung Electronics Corporation, and more specifically to Samsung Electronics
Vietnam.

Research period: The thesis collects data reflecting business performance and
sustainable supply chain performance of Samsung Electronics Corporation during the
last 4 years, from 2017 to 2020, and the value of sustainable management under the
impacts of Covid-19 within the time period from 2018 to 2020.

5. Research methodology

To achieve the purposes that have been brought up, the thesis is implemented with a
combination of several methods including case study method, literature review
method and documentation synthesis method. Particularly, the case study method is
chosen as the main method of the thesis.

The case study method is a popular research technique in the social sciences. A case
study is a research strategy and empirical investigation that studies a phenomenon in

6
a real-life context, which may focus on a specific person, organization, or event. The
case study method can be applied to clarify, describe, or investigate events or
phenomena in their everyday settings. To be more specific, this method can entail the
study of one or more "cases," which could be regarded as instances, examples, or
contexts where the problems or phenomena can be examined. The case study method
requires two main tasks including giving deeper descriptive information of the
studied object and analyzing theoretical relevance between the theories and the case.
A detailed explanation allows for a more in-depth or refined comprehension of the
case. Therefore, the researcher is responsible for determining the parameters of the
case (what is included and excluded). In this thesis, the case study method of Samsung
Electronics Corporation is used as an example of a sustainable supply chain. From
the case of Samsung Electronics Corporation, the thesis points out the applicable
recommendations for Vietnamese enterprises to build a sustainable supply chain.

In addition, the thesis is also implemented by the desk research method. The desk
research method is considered as a study method making use of already available data
(also known as secondary data). First, existing data is collected through various
sources, then analyzed to find the most appropriate for the objectives that the research
is heading towards. Next, the suitable data is summarized, classified, and organized
in order to improve the overall effectiveness of research. The desk research
comprises research data reported in research reports and other similar documents.
These materials can be approached via public libraries, websites, completed surveys,
government and non-government organizations, and so on. In this thesis, the
keywords chosen for the selection of papers belong to three categories: supply chain,
sustainable supply chain, sustainability, and Covid-19. The thesis reviews types of
articles as follows: comprehensive literature reviews, case studies and surveys,
theoretical and conceptual works as well as organizations’ public reports.

5. Structure of the research

In addition to Introduction and Conclusion, the content of the thesis is divided into
three chapters as follows:

Chapter 1: Theoretical framework on supply chain and sustainable supply chain.

Chapter 2: Sustainable supply chain of Samsung Electronics Corporation during

Covid-19 pandemic.

Chapter 3: Recommendations for Vietnamese enterprises on building sustainable

supply chain.

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 CHAPTER 1

THEORETICAL FRAMEWORK ON SUPPLY CHAIN AND

SUSTAINABLE SUPPLY CHAIN

1.1. Overview of supply chain

1.1.1. Definitions of supply chain

Supply chain became a popular concept to academics and practitioners from the early
1980s. In 1982, Oliver and Webber defined supply chain as a “network of
organizations that are involved, through upstream and downstream linkages, in the
different processes and activities that produce value in the form of products and
services in the hands of the ultimate consumer” (Oliver and Webber, 1982).

Over the years, the term supply chain has gained increasingly considerable interest
and popularity. Pienaar W. (2009) used this term to describe “a general description
of the process integration involving organizations to transform raw materials into
finished goods and to transport them to the end-user”. With the same opinion, Harald
Gleissner and J. Christian Femerling explained supply chain as a string of logistical
elements which comprises all elements, agents, and processes involved in both the
physical and virtual (informational) flow of goods from the source to the drain
(Harald Gleissner và J. Christian Femerling, 2013).

Sunil Chopra and Peter Meindl (2013) also stated “a supply chain consists of all
parties involved, directly or indirectly, in fulfilling a customer request”. In fact, the
supply chain involves not only the manufacturers and suppliers, but also transporters,
warehouses, retailers, and even customers themselves. The supply chain encompasses
all tasks involved in receiving and fulfilling a client request. These tasks include, but
are not limited to, new product development, marketing, operations, distribution,
finance, and customer service.

Thus, in general, a supply chain can be acknowledged as a network comprising

several processes and subjects which aims at generating the smooth flow of goods. It
starts from the procurement of raw materials to the distribution of finished goods to
final consumers. Recently, due to the increasing volume of goods exchanged globally
as well as the complexity of consumer demand, supply chain systems have become
extremely large and involved the participation of many sides across different
countries and territories.

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1.1.2. Objectives of supply chain

According to Sunil Chopra and Peter Meindl (2013) the ultimate objective of every
supply chain is supply chain surplus maximization. The supply chain surplus that a
supply chain generates is the difference between the value of the final product to the
consumers, and the costs incurred within the supply chain to acquire the customer’s
requirements. Meanwhile, the customer value of the final product may differ for each
customer and can be estimated by the maximum amount the customer is willing to
pay for it. And, cost is the overall expenses spent along all stages of the supply chain
and by all agents.

The formula is presented as:

Supply Chain Surplus = Customer Value – Supply Chain Cost.

However, along this process, all components of a supply chain also contribution to
the purpose as fulfilling customer’s needs, which can lead to higher customer value
of finished products. The two major objectives also differ depending on chief
purposes of businesses among social, environmental, economical, agility or
uncertainty considerations. Hence, a number of strategies are available to be applied
to pursue that objective and there is a need for a thorough performance evaluation to
measure whether the objective of the supply chain is accomplished.

1.1.3. Structure of supply chain

Harald Gleissner and J. Christian Femerling, 2013, described a generic supply chain
as below:

Figure 1.1. Structure of a supply chain

Source: Harald Gleissner và J. Christian Femerling, 2013, p. 21

9
A supply chain is always dynamic and involves the constant flow of information,
product, and funds between different stages as well as the co-operation among all
agents. These flows often occur in both directions and may be managed by one of the
stages or an intermediary (Sunil Chopra and Peter Meindl, 2013).

From the above figure, it is recognized that there are five main types of agents
forming part of supply chains including: (1) Raw material producers (growing,
extraction and so on); (2) Manufacturers, producers (suppliers, industry, processors
and so on); (3) Wholesalers, distribution provider, importers, exporters; (4) Retailers;
and (5) Users, consumers of the finished products. Five components mentioned above
are crucial to assure the function of the whole supply chain, but not every component
is compulsory. Among those, there are three agents considered as integral including:
Material suppliers, Manufacturers and Consumers.

Suppliers are responsible for providing raw materials, services or any necessary parts
for the production process. Suppliers may involve multiple entities as well as multiple
levels. Generally, suppliers can be divided into two level: First-tier suppliers and
Second-tier suppliers. First, secondary-tier suppliers gather the raw materials and
resources from several sources. Then, based on the orders and requirements from
First-tier suppliers, they turn raw materials into the new forms that can be utilized in
the next production stage. After that, based on orders and requirements from
manufacturers, First-tier suppliers continue to handle these materials so they can be
ready for production process and transported to producers.

After gathering enough input components from suppliers, producers use their own
manufacturing process to make the finished products. Each producer possesses
unique production criterion, and they follow them strictly at every stage to assure that
their end products are completely qualified before consumption. Moreover, producers
also apply their own strategies and management policies to avoid any faults in final
products that can exert a detrimental effect on the following stages in the whole
supply chain. Next, final products will be delivered to the consumers directly or
indirectly (through retail channels).

Customers purchase a product after taking into consideration a combination of factors

such as price, quality, availability, durability, brand factors, and expectation that the
purchased product will meet their needs and requirements. Thus, businesses and
supply chains that can fully offer the above factors through their products and services
may get more profit. After receiving goods, customers may also need to return, get

10
warranty for defected ones, remove as well as recycle the product. Such reverse
logistics activities are also parts of the supply chain.

In addition to the three basic components mentioned above, a supply chain also
requires the involvement of distribution centers and warehouse systems to ensure the
smoothness of the circulation of goods. A distribution center can be a warehouse or
other special building system which are used to store goods for distributing to
retailers, wholesalers, or directly to customers. In the context of end-customer
delivery of goods, storage is particularly important for distribution logistics. In
addition to the function of actual storage, additional tasks such as picking, packaging,
and return processing are also handled at the warehouse. Then, from the warehouse,
goods will be transported directly to the recipient or indirectly to the points of sale
for consumption by the end user.

1.1.4. Roles of supply chain

Theoretically, supply chains work as a cohesive, singularly competitive unit,

accomplishing what many large, vertically integrated firms have tried and failed to
accomplish. (Joel D. Wisner, Keah-Choon Tan & G. Keong Leong, 2012)

First of all, the supply chain helps to control the input and output of the business more
efficiently. Regarding the input handling stage, building relationships with suppliers
within a supply chain can help enterprises easily obtain materials with competitive
prices, optimal quality and higher availability. On the output handling stage, building
relationships with distributors helps businesses have a closer and more detailed view
of the market, thereby making appropriate adjustments for business strategies.

Second, supply chains allow businesses to minimize their costs and maximize
competitiveness through specialization. It is because when businesses decide to
assign complicated, cost-intensive and highly specialized tasks to specialized units in
the supply chain, the company will save time and other resource while still
completing the task and fully achieve their goals.

Thirdly, supply chains offer flexibility as independent businesses in the chain can
freely join or leave the network if they find it no longer suitable and profitable. This
freedom enables businesses in the supply chain to operate more efficiently, and thus
also improves their business performance in the long run.

Last but not least, operating within a supply chain can help firms detect the roots of
any problems or troubles that occur at a faster speed. It is because each stage is

11
handled by different side with unique function, so each side can work internally to
find out the culprit as well as solutions without bothering other stages in the supply
chain. This can boost the efficiency of the whole operation process of the company.

1.2. Overview of sustainable supply chain

1.2.1. Definitions of sustainable supply chain

There are several definitions for sustainable supply chain. Carter and Roger (2008)
defined the concept of sustainability within the context of supply chain as “the
integration of environmental, social, and economic criteria allowing an organization
to achieve the long-term economic viability”.

Although the origins of the term “sustainable” can be traced back as early as the 18th
century, its profile rose remarkably with the issuing of the “Report of the World
Commission on Environment and Development: Our Common Future” in 1987,
commonly known as the Brundtland Report (United Nations, 1987). The United
Nations-appointed Brundtland Commission defined sustainability as “development
that meets the needs of the present without compromising the ability of future
generations to meet their own needs”. This definition highlights the notion of “needs”
versus “limitations”, which is critical in the sustainability debate.

Then, Cocklin also conceptualized sustainability in terms of a set of goals relating to

social, economic, and environmental subsystems. The relation of sustainability to
other management goals such as resilience and economic efficiency is considered to
be ultimately ideological in nature, and thus trade-offs occur both internally and
externally. (Cocklin, 1989)

In the past two decades, the sustainability concept has increasingly attracted both
scholars and practitioners worldwide. Incorporating three interconnected pillars
(Ranjbari et al., 2019), sustainability deals with a balanced integration of social,
environmental, and economic performance of human lives within the society,
environment, and economy to the benefit of current and future generations
(Geissdoerfer et al., 2017).

Building on the definition of sustainable operations management by Kleindorfer et

al. (2005), a sustainable supply chain is considered as one that is operated in a way
that generates competitive returns on its capital assets without sacrificing the
legitimate needs of internal and external stakeholders with due regard for the impact
of its operations on people and the environment.

12
Born from the incorporation of the sustainability outlook into the management of
supply chains, sustainable supply chain management was initially devoted mainly to
the environmental aspect besides the traditional economic aspect. Later, it has
expanded to include social concerns as well. Since then, sustainable supply chain
management may be understood as the management of material, information and
capital flows as well as cooperation among all agents along the supply chain while
taking into account goals derived from customer and stakeholder requirements in
three dimensions of sustainable development (i.e., economic, environmental and
social).

In sustainable supply chains, environmental and social criteria need to be fulfilled by

the agents to remain within the supply chain, while it is expected that competitiveness
would be maintained through meeting customer needs and related economic criteria.
The successful companies not only consider sustainability as a method to contribute
to social goals, but also as a powerful source of competitive advantage.

1.2.2. Benefits of sustainable supply chain

According to Carter and Roger (2008), a considerable number of companies
throughout the world devoted significant resources and capabilities to building
sustainable supply chain since they recognized that such initiatives could provide
positive benefits including greater customer satisfaction, revenue rise, and profits
growth. In fact, companies can benefits a lot from building a sustainable supply chain
in terms of various sectors.
First, sustainable supply chain can offer the company substantial benefits in terms of
economic sector. There have been several studies showing a link between sustainable
supply chain management and economic performance (Ellram & Liu, 2002). It is
estimated that the supply chain provides up to 75% of the value of goods and services
for organizations (Trent, 2004). According to Hendricks & Singhal, supply chain
disruption lowers the value of short-term and long-term shareholders, reduces sales
growth, increases expenditures, and diminishes the current assets (Hendricks &
Singhal, 2003). Roekel et al. (2002) stated that manufacturers in developing nations
and rising economies should access market information and expertise through the
supply chain, which will allow them to improve their operations and raise their
value. A sustainable supply chain may provide a great number of
advantages including minimizing product losses, boosting sales, lowering transaction
costs, improving product quality and safety, and sharing technology, money, and
expertise across chain partners. Hence, the business's economic performance may be
enhanced. Moreover, CSR is also an important factor in building a sustainable supply

13
chain. The relationship between CSR and economic performance has been
investigated in many studies (Hasan et al., 2018). CSR implemented in the business
strategies to make customers feel more satisfied, and increase customers’ trust in the
prestige of the companies. Thus, customers may make repeated purchases and
positive propaganda which may boost the firms’ revenue and reduce promotion and
sales costs, thereby increasing economic performance (Gather, 2010). Furthermore,
CSR activities are also proved to raise the employees’ productivity. Employees who
work in better working environment, have greater opportunities for promotion can
make greater commitment to businesses and make higher productivity. Thereby,
production costs can be reduced, leading to increasing economic performance (Hasan
et al., 2018).
Second, sustainable supply chain management ensures the supply chain’s conditions
that help the businesses improve their image and reputation in the market. Schaltegger
and Wagner (2017) found that promoting and applying sustainable practices in the
supply chain have many benefits, such as improving the firm's image and raising
brand awareness. According to The Economist, over 40% of customers across various
market sectors has been more likely to purchase sustainable products since the
pandemic. Also, an increased subset of customers buying a premium for ethically
sourced and manufactured goods has been recorded as well. Therefore, building a
sustainable supply chain can exert a positive impact on the brand image, thus boost
the sales and improve customer loyalty to the brand as well.
Figure 1.2. Sustainability matters index

Germany

US

UK

Singarpore

Italy

China

India

0 10 20 30 40 50 60 70 80

Source: The Economist, 2021

14
Last but not least, activities toward a sustainable supply chain can help the company
employ well-qualified staff. Ben Keighley, co-founder of AI talent acquisition
platform stated that people are more likely to work for, invest in, and purchase from
firms that have strong sustainable credentials. In other words, firms have a high
chance of attracting and hiring high-quality staff if they can demonstrate a strong
commitment to sustainability goals. It is because job seekers nowadays consider that
the success of a company should not be evaluated in terms of its financial
performance only. They think that companies should also give priority to the
environment and care for the social life of their staff. Therefore, organizations that
make a clear commitment to becoming more sustainable can enhance their employer
brand, which leads to increased attraction with potential employees. In turn, hiring
talent that cares about and prioritizes sustainability is important to the overall supply
chain resilience, risk mitigation, and cost and quality control of the company.
Attracting and retaining great talent is not only important for a company's success,
but it's also a top priority. While talent attraction guarantees that the top candidates
are hired for a position, talent retention assures the company's productivity and
development in the long-term.
According to a survey of Polycase, 67% of potential employees want to work for an
environment-conscious company. 80% of millennials also choose to work for a
company that is responsible for social issues. Jane Biggs, founder of the specialist
legal recruitment agency Bygott Big mentioned that by making workplaces more
sustainable, companies will align with the their workers' post-pandemic priorities.
“The pandemic has shifted the priorities of job applicants,” she stated. Flexible
working opportunities and a greener, more sustainable approach, combined with a
great work-life balance, improve an employer’s brand image leading to more
efficiency of talent attraction and retention process. In conclusion, corporations
should adapt quickly to this change and have appropriate strategies for sustainability
goals.
1.3. Building sustainable supply chain requirements
1.3.1. Establishing a sustainable strategy
In 2007, A.T. Kearney and the Institute for Supply Management (ISM) conducted a
survey with the participation of Fortune 100 firms across several industries including
consumer goods, pharmaceuticals, electronics, and airlines. These are all big
corporations with annual revenues up to $70 billion. 36 percent of companies reported
that they already launched a formal and detailed sustainability strategy for supply
chain management. A well-devised strategy defines the values a company wants to
emphasize, announces how it generate those values, and identifies consequences

15
when suppliers or employees do not fulfill the requirements. The firm's aims and
values are informed by detailed concepts, which influence corporate practices and
standards for engaging suppliers. Furthermore, firms can enhance its accountability
and performance by assuring that these values, principles, and instructions are all
clear to both internal and external parties.
As mentioned above, the concept of sustainability involves the integration of three
components including economic, environmental, and social. Therefore, to devise a
sustainable strategy for the supply chain, firms must first identify and understand their
economic, environmental, and social characteristics, and then find out which sector
they should put the greatest emphasis on. For big corporations with enormous
financial and technological resource, they can allocate their resources equally to all
sustainable sectors. But for small and medium-size enterprises, they should make the
decision about which sector they need to focus more.
1.3.2. Retooling the organization
As firms aim to bolster the role of sustainability in their supply chain management
practices, they must put forward specific guidelines and procedures for all stages and
agents involved in the supply chain, create training programs for all related parties,
and so on. According to the survey of A.T. Kearney, 54% of firms provided written
sustainability guidelines to supply management staff. 40% of firms launched training
sessions on sustainability management. 12% of companies granted public awards or
recognition for supply management staff or employees meeting sustainability goals.
These policies may encourage the whole organization to head towards sustainability
goals.
1.3.3. Managing supplier relations
Supplier is an integral part of a supply chain. Therefore, managing a strong
relationship with suppliers is of utmost importance in building a sustainable supply
chain. Building relationships with suppliers requires a great deal of effort from both
two parties. The key elements that should be mentioned include building trust at all
levels of management, clearly sharing visions, goals, and guidelines, ensuring mutual
benefits of all parties, committing to the support from the top management level, and
so on. The research by Chang KRW Lee, Ik-Whan G. KKRW, and Dennis Severance
(2007) indicates that relationships with suppliers are one of the key factors in the
stability of the overall performance of the corporation.
To ensure that suppliers are also involved in the sustainable supply chain, a company
must provide clear sustainability-related guidelines and criteria for their suppliers. In
this code of conduct, the company must mention in detail the requirement for all
sectors of sustainability (environment, economic and social). However, according to

16
the survey of A.T. Kearney, 20% of the surveyed companies said they performed
poorly in setting stronger supplier standards on both environmental and human rights
issues. About the same proportion have only implemented supplier controls in the last
five years.
For big corporations, the code of conduct for suppliers is published annually and their
suppliers are also assessed by several criteria in terms of sustainability. Take Apple
as an example, Apple requests their supplier to comply with labor, human rights as
well as environmental, and ethical standards. Wherever they create products or offer
services for Apple, suppliers must provide safe working conditions, treat employees
with dignity and respect, operate fairly and ethically, and apply environment-friendly
techniques. Apple also demands that its suppliers act in accordance with the
principles and obligations set out in this Apple Supplier Code of Conduct, as well as
all relevant laws and regulations. Apple will evaluate its suppliers' adherence to this
Code, and any violations may result in a supplier's business relationship with Apple
being jeopardized, up to and including termination. This Code applies to Apple
suppliers and their subsidiaries, as well as sub-contractors and sub-tier suppliers that
provide goods or services to Apple or for use in or with Apple products.
1.4. Sustainable supply chain measurement indicators

The topic of sustainability measurement in a supply chain has gained substantial

attention from the academics for a long time. There are a lot of models, frameworks,
tools, metrics used with the aim of evaluating and assessing the sustainability of a
supply chain. This topic is of great importance because the sustainability
measurement may help to increase the level of understanding and cooperation among
the supply chain partners and to increase the supply chain wide integration.

The Supply Chain Operations Reference model (SCOR) is known as a key tool for
measuring supply chain performance in general. This framework was built to
describe, measure, and compare supply chains (Supply-Chain Council, 2008).
According to Blanchard, 2008, in the latest version of SCOR, it included metrics
aimed at improving sustainability such as emissions cost per unit and waste produced
as a percentage of product produced.

The Global Reporting Initiative (GRI) is another standard basement used to develop
criteria for sustainability assessment reporting. The latest reporting guidelines which
was issued in 2006 pointed out how organizations could show their environmental,
social, and economic performance to the public (GRI, 2006). Hussey et al' (2001)
discussed how the GRI guidelines can be operationalized, and Veleva et al' (2003)

17
clarified the types of indicators organizations can utilize to describe their
sustainability efforts.

Basically, a system of indicators is mandatory to evaluate the sustainability-related

performance of a supply chain. As mentioned above, the concept of sustainability
within the context of supply chain as “the integration of environmental, social, and
economic criteria allowing an organization to achieve long term economic viability”.
Therefore, sustainability performance indicators can be defined as indicators that
help to measure the performance of an organization at least in one of the three
dimensions of sustainability (Muhammad Amad, Kersten, Wolfgang, 2017). To be
more specific, in each sector, there are several attribute indicators that may
demonstrate the sustainably of a supply chain more clearly. Each attribute category
defines a set of sustainable supply chain management objectives that a company and
its supply chain should strive for in order to remain sustainable. An organization's
sustainability performance is assessed in terms of each sustainability dimension based
on the performance of the attribute categories and indicators.

1.4.1. Environmental sustainability indicators

The term "environment" usually refers to the natural environment, which

encompasses all living and non-living objects that exist naturally on Earth, such as
land, water, plants, and animals. Enhancing environmental sustainability entails
lowering the supply chain's ecological footprint. The environmental aspect of supply
chain management has received the greatest attention among the three aspects so far.

In fact, in the past, it is recorded that most efforts towards evaluating supply chain
sustainability have focused on environmental issues (Mclntyre et al., 1998). Walton
et al. (1998) used a case-based approach to identify key focus areas for improving the
purchasing function's impact on environmental performance. Kumar et al. (2001)
developed a methodology to assess the environmental impact of a product and the
processes required to produce it. Handfield et al. (2002) identified more than 50
environmental performance indicators by which suppliers can be evaluated, and
illustrate the use of a quantitative technique with which to evaluate suppliers based
on a number of dimensions, including waste management, certifications (e.9.,
ISO14000), and compliance with government regulations. Nagel (2006) proposed a
measure of environmental performance that original equipment manufacturers can
use to evaluate their suppliers using a set of equations that describes the relationship
between the inputs and outputs of a production process.

18
According to The Journal of Global Business Management, 2010, environmental
dimension can be divided into six main categories including: Air (e.g., carbon
monoxide emissions, ozone depletion), Water (e.g., toxic discharges as well as total
consumption), Land (e.g., land usage, soil pollution), Materials (e.g., renewable and
non-renewable consumption), Minerals and energy (e.g., non-renewable mineral and
energy resources), and Institutions/Systems (EMS in use, regulatory compliance)

In conclusion, the environmental sustainability dimension includes attributes for

inputs such as energy, water, and materials, as well as outputs such as waste and
emissions. Recently, environmental sustainability has been grouped into eight
attribute categories in order to assess an organization's environmental sustainability
performance, as indicated in this below table:

Table 1.1. Environmental sustainability measurement indicators

Attribute category Indicators

Energy efficiency Total energy usage (including renewable and non-renewable

sources)
Material efficiency Material input (including renewable, hazardous and recycled
material)
Water management Total water usage and total water discharge; recycled water
proportion
Waste management Total amount of waste discharged and recycled

Emissions Total GHS emissions

Land uses Total land area used for operation

Environmental Organization’s compliance with environmental regulations

compliance (environment standards, environmental certificates achieved)
Supplier Suppliers’ environment performance and selection norms.
assessment

Sources: Saeed, Muhammad Amad, Kersten, Wolfgang (2017), p.5

1.4.2. Social sustainability indicators

The social dimension of sustainability refers to the social and human value of the
supply chain. Enhancing social sustainability requires adopting and sustaining
corporate practices that are fair and beneficial to workers, communities, and all areas
impacted by the supply chain.

19
According to Amindoust et al. (2012), companies should take the health and safety
conditions of their employees, as well as other essential social factors, into account
in a socially responsible supply chain. Meanwhile, Bai and Sarkis (2010) have
differentiated internal and exterior social sustainability criteria. Internal social
sustainability criteria include elements like as health and safety and employment
practices, whereas external social sustainability criteria include the effect of local
communities, contractual stakeholders, and other stakeholders. In order to develop a
sustainable supplier selection framework, Azadnia et al. (2015) used occupational
health and safety management system, training education, and community
development as social sustainability criteria. Based on The Journal of Global
Business Management, 2010, social performance indicators are grouped into three
categories including: Workplace (internal human resources management),
Community (including people directly and indirectly impacted by the chain's
performance), and Institutions/Systems (internal and external systems, procedures,
and values that relate to the social dimension). Within each category, the appropriate
metrics and indicators will be determined by the industry, region, cultural norms, and
other factors.

To sum up, the way a company handles its duties toward its social and human capital
determines its social sustainability. As stated in the below table, social sustainability
was summarized clearly into six attribute categories in order to assess an
organization's social sustainability performance.

Table 1.2. Social sustainability measurement indicators

Attribute category Indicators

Human rights & The corruption and violation of basic human rights
anti-corruption (discrimination, child labor at workplace)

Human resources The human resources management (women ratio at work,

turn-over rate, employee’s benefits)

Health & safety The number of injuries and illnesses

Training & Training and education opportunities provided to

education employees, the number of employees joining training
courses

20
 Consumer issues After-sales services (customers’ complaints handling,
product returns)

Social compliances Organization’s compliance with social regulations, CSR

activities

Sources: Saeed, Muhammad Amad, Kersten, Wolfgang (2017), p.6

1.4.3. Economic sustainability indicators

The profit gained by supply chain members as well as the economic advantages
obtained by nations, regions, and communities of those members are referred to as
the economic component of the supply chain. As a result, this dimension extends
beyond a company's internal profits, and some of the characteristics that fall within
this category may be difficult to quantify in financial terms.

According to The Journal of Global Business Management, 2010, economic factors

are divided into four categories such as: Economic performance (the ability of the
firm to carry out its operations as well as the market value of the firm.: e.g., operating
profit, net profit), Financial health (well-being and long-term viability of the firm
with respect to financial resources), Market and structure (health of the market and
the configuration of the supply chain), and Institutions/System (internal and external
systems, procedures, and values that relate to the economic dimension). However,
this classification is not quite clear.

In conclusion, economic sustainability can be outlined as the allocation and flow of

financial resources among organization’s stakeholders and its impact on the
environment and the society. Economic sustainability is grouped into four attribute
categories as indicated in Table 1.3.

Table 1.3. Economic sustainability measurement indicators

Attribute category Indicators

Economic performance Financial heath (including total sales, revenues, operating

profits, cash flow and so on)

Income distribution Employees’ wages, payments to governments and

community in term of taxes and so on

21
 Market Organization’s market share performance, earning per
competitiveness share

Sustainability Organization’s spending on sustainability related

expenditures activities (CSR, R&D, and so on)

Sources: Saeed, Muhammad Amad, Kersten, Wolfgang (2017), p.6

Saeed, Muhammad Amad, Kersten, Wolfgang (2017) also stated that among all
sustainability measurement indicators, there are some indicators that are of greater
importance. Regarding environmental sustainability, key issues were energy
efficiency, material efficiency, water management, waste management and
emissions. Meanwhile, in the social sustainability section, human rights, human
resources, health and safety, and training and education were the most important. In
the economic sustainability dimension, market competitiveness and income
distribution were the core indicators. Therefore, in order to evaluate the sustainability
of an organization, these aforementioned indicators should be used mainly to draw a
conclusion that a supply chain is sustainable or not.

22
 CHAPTER 2

SUSTAINABLE SUPPLY CHAIN OF SAMSUNG

ELECTRONICS CORPORATION DURING COVID-19
PANDEMIC

2.1. Overview of Samsung Electronics Corporation and Samsung Electronics

Vietnam

2.1.1. Introduction of Samsung Electronics Corporation and Samsung Electronics

Vietnam

Samsung Electronics Corporation is one of the global leading electronics devices

manufacturers. Samsung produces a wide range of consumer and industrial
electronics, including appliances, digital media devices, memory chips, and
integrated systems. The corporation was first founded in 1969 and immediately
established itself as a significant Korean manufacturer. Throughout 50 years of
development, with the huge success of its electronics business, Samsung has been
recognized globally as an industry leader in technology and now ranked as a top 10
global brand. It has become one of the most well-known names in technology section,
making up for nearly a fifth of total exports value for South Korea. (Appendix 1)

Table 2.1. Worldwide offices classifications

Classifications Number

Regional Offices 15

Sales Offices 53

Production Sites 36

R&D Centers 39

Design Centers 7

Others 83

Total 233

Source: Samsung Electronics Sustainability Report 2021, 2021, p.04

23
Until the middle of 2021, Samsung had 233 worldwide operating hubs, including the
headquarter in Suwon, South Korea, manufacturing subsidiaries, sales subsidiaries,
design centers and R&D Centers, while operating 15 Regional Offices in South
Korea, North America, Europe, Southeast Asia, Africa and other regions of the
world.( Samsung Electronics Sustainability Report 2021, 2021, p.04)

Samsung Electronics Vietnam Co., Ltd. (SEV) belongs to Samsung Electronics

Corporations. It was granted with investment license in 2008, and then officially
operated from April 2009 (Appendix 2). SEV has a total workforce of 110,000
employees in all offices and factories. SEV includes four large factories namely
Samsung Electronics Vietnam (SEV) - Bac Ninh, Samsung Electronics Vietnam -
Thai Nguyen (SEVT), Samsung Display Vietnam (SDV) and Samsung Electronics
HCMC CE Complex (SEHC). Samsung Vina Electronics (SAVINA) was responsible
for Sales and Marketing activities of Samsung in Vietnam with its headquarters at
Bitexco building, District 1, Ho Chi Minh City. However Samsung Vina Electronics
(SAVINA) has been closed recently.
At present, Samsung is pouring its investments in the Northern provinces of Bac Ninh
and Thai Nguyen, and Ho Chi Minh City, with total investment capital of over
US$17.5 billion, employing more than 160,000 local workers. The group is also now
constructing a US$230 million research and development center in Hanoi. Samsung
has invested $17.3 billion in eight factories and two research and development centers
in Vietnam, creating jobs for more than 160,000 locals. It is the largest foreign
investor in Vietnam. The media cited Samsung’s statistics as stating that around 50%
of the group’s smartphones and tablets are produced in Vietnam and exported to 128
countries and territories, including the US, Europe, Russia and Southeast Asia.

2.1.2. Core businesses

Samsung Electronics consists of business divisions that are distinguished by product

categories – Consumer Electronics (CE), Information Technology & Mobile
Communications (IM), and Device Solutions (DS) – which operate independently.

The CE Division is responsible for the production of TVs, monitors, refrigerators,

washing machines and air conditioners, fulfilling customer requirements and taking
the lead in the global digital era by continuously providing new products featuring
innovative technology, unique designs, and enhanced value propositions.

The IM division focuses on the production and sales of smartphones, network

systems and computers, among other products. For smartphones, a core product of

24
the business, with the Galaxy series, Samsung has successfully built a lineup ranging
from low-end right through to premium models to meet the needs of various
customers groups.

The DS division, which includes the semiconductor business, manufactures and sells
products such as DRAMs, NAND Flash, and mobile AP. The Memory Business
produces and sells DRAM and NAND items; the System LSI Business designs and
sells mobile application processors (“mobile APs” or “APs”) and camera sensor
chips; the Foundry Business is responsible for the consignment production of
semiconductors; and the DP Business manufactures and sells display panels.

The Harman Division was acquired in 2017. It is considered as a well-known name

in the market for connected automobile systems, audio and visual goods, professional
solutions, and linked services, designing and developing connected products and
solutions for automakers, consumers, and businesses across the world.

In addition to the main Korean headquarters, there are nine regional offices for CE
and IM divisions and five regional offices for the DS division, responsible for
production and sales. In 2021 the DS division generated highest sales and operating
profit for Samsung Electronics Corporation.

Table 2.2. Core business categories

Unit: KRW billion

Category Main products Sales Operating Profit

CE Division TVs, monitors, 48,173.3 3,561.5

(Consumer Electronics) refrigerators,
washing machines,
air conditioners

IM Division HHP, networks 99,587.5 11,472.7

(IT & Mobile system, computers
Communications)

DS Division DRAM, NAND 72,857.8 18,805

(Device Solutions) Flash, Mobile AP

Source: Samsung Electronics Sustainability Report 2021, 2021, p.03

25
2.1.3. Mission, vision and business principles

Samsung follows the philosophy as below: “We will devote our human resources
and technology to create superior products and services, thereby contributing to a
better global society.”

In order to attain this, Samsung places a high priority on its people and
technologies. Samsung Electronics is committed to putting all of its human and
technological resources into developing outstanding goods and services, ultimately
contributing to a better world. To that end, the company created the Samsung
Electronics Global Code of Conduct, which translates five Samsung corporate values
into comprehensive action plan recommendations for all personnel. Samsung adheres
to key principles that are critical to how people conduct business in order to achieve
sustainable growth and determine the path forward.

Samsung Electronics Corporation commits following strictly five principles as

below:

(1) Samsung complies with laws and ethical standards: Samsung is committed to
respecting all fundamental human rights. Under no circumstances does the
corporation allow forced labor, wage exploitation, or child labor. Samsung does not
discriminate against any stakeholders, including consumers and workers because
of their nationality, ethnicity, gender, religion, or other characteristics.
Samsung follows the national and social laws in the countries it does business, as
well as respect the principles and practices of commercial competition. The
corporation does not allow gifts exchange, entertainment, or any other type of bribery
as an enticement to participate in immoral business practices.

(2) Samsung maintains a clean organizational culture: In all corporate activities,

Samsung maintains a clear distinction between public and private matters. The
corporation safeguards and respects the company's and others' intellectual property.
Samsung also promotes a friendly and healthy working environment for all
employees by establishing win-win labor-management relations based on mutual
trust and open communication

(3) Samsung respect customers, shareholders and employees: Customer satisfaction

is considered as the utmost goal in all of the company activities. Samsung
prioritizes shareholder value by attempting to create long-term benefits to
shareholders via prudent investment and efficient management. Samsung also
strives to improve the quality of life for staff by motivating all workers to pursue

26
continuous self-development and actively supporting their ability to grow for greater
business success.

(4) Samsung care for the environment, safety and health: Samsung engages in
environment-friendly management practices by adhering to global standards,
associated legislation, and internal environmental rules. Furthermore, Samsung
attempts to implement resource-efficient operations such as recycling. The
corporation values human health and safety by taking every effort to avoid providing
items and services that might endanger human health and safety.

(5) Samsung are a socially responsible corporate citizen: Samsung actively

carries out its responsibilities as a corporate citizen. Samsung aims at
increasing public trust by follow obligations and duties as a local communities'
member. The corporation also values the unique aspects of local tradition, culture,
and society, and aspires to develop alongside local communities. Samsung
creates win-win situations with its business partners by building mutual
trust with suppliers and regarding them as strategic partners.

2.2. The sustainable supply chain of Samsung Electronics Corporation

2.2.1. Structure of Samsung Electronics Corporation’s supply chain

Samsung Electronics Corporation's supply chain also includes the basic elements as
a typical supply chain, which are suppliers, manufacturers, distribution centers,
warehouses, retailers and consumers. Below is the structure of Samsung Supply
Chain with both Primary Activities and Supportive Activities listed.

Figure 2.1. Structure of Samsung Electronics Corporation’s supply chain

27
 Source: The Korea Associates Business Consultancy Ltd., 2012, tr. 13

2.2.1.1. Procurement process

Regarding procurement process, Samsung creates opportunities for procurement to

take place locally as well as globally. The opportunities for global procurement will
give the company a competitive advantage in securing good suppliers. Samsung
Electronics maintains 233 global bases in 74 countries. There are total 2,389 suppliers
working for these offices. The corporation has set up an International Procurement
Center (IPC), which serves as a central hub for handling supplier relationships.
Companies that desire to be a part of Samsung's supplier management system can
submit their applications to the IPC and the Global Supplier Relationship
Management System.

Through the establishment of the joint venture Samsung Technology Sourcing

Collaboration, Samsung established strategies with tight control to maintain
relationships with suppliers and partners; IT infrastructure support improves the
capabilities of partner companies and creates Cost Saving Project Innovation
processes (Relevant SEC departments and companies partners can develop cost-
effective initiatives).

For instance, in Vietnam, Samsung has formed a list of reputable suppliers (Vendor)
to serve Samsung's procurement. Samsung Vietnam has hundreds of suppliers with
many outstanding names such as Dongyang, Elentec, GoerTek, Hosiden or Myouni.

2.2.1.2. Production process

The company has production sites in several countries across the globe namely China,
India, Vietnam. However, Samsung maintains a single quality standard across all of
its factories. Each product segment will be manufactured in its own factories and

28
assembly plants. The assembly line is carried out internally by Samsung without the
involvement of any outside businesses.

Samsung’s biggest manufacturing facilities are located in Thai Nguyen (SEVT) and
Bac Ninh (SEV). These factories are producing items such as smartphones, tablets,
wearable devices as well as home devices. The company is currently on the process
of building other factories to expand its production across the country. The existing
factories generated 120 million units per year. Vietnam provides the majority of
Samsung's global supply including regions such as North America and Europe.

Each product has to pass an extremely strict quality evaluation process. Samsung has
Input quality control (IQC), Process quality control (PQC) and Output quality control
(OQC) departments. Products after being manufactured will be inspected by PQC and
then by OQC the department before packing. The method applied is direct inspection
method on the assembly line. However, the quality evaluation is not conducted
manually but completely through the system of machines and programs that have
been built, designed and thoroughly tested in Samsung Korea.

Samsung also develops its Manufacturing Quality System which helps Samsung
identify any unpredictable variations in processes and production. With the help of
their Interlock System equipment and fault detection control, recipe and other
important parameters are monitored. Moreover, a Statistical Process Control is set
up to detect abnormalities and take preventive actions before quality issues occur.
Furthermore, Samsung performs Equivalence Tests to statistically match and
monitor consistency of performance at different points of manufacturing, such as
facilities, materials, equipment, input and output criteria.

2.2.1.3. Distribution process

To be able to create a well-controlled distribution process, Samsung has its own in-
house logistics company called Samsung Logitech. As mentioned above, Samsung
Electronic Logitech specializes in purchasing and logistics support functions. The
main role of Samsung Logitech is to provide logistics services for Samsung
Electronics products for domestic, international and B2B markets. The company also
assumes the role of negotiating payments for the SEC's export products and claims
insurance when talking directly with Samsung Insurance. Samsung Logitech helps
with the payment of export products by issuing documents such as letters of credit
and presentation to banks. Currently, Samsung's distribution system is divided into
domestic and foreign segments:

29
 Table 2.3. Domestic distribution channel classification

Classification Channel Collection Incidental expense

sharing

Exclusive Retailer Credit specific Case specific cost

sharing as determined
by mutual agreement

Distributor General Case specific and Case specific cost

merchandise contract specific sharing as determined
store, discount by mutual agreement
store, department
store, home
shopping, online

Telecommuni SKT Co., Ltd., Case specific and Case specific cost
cation service KT Corp. LG contract specific sharing as determined
provider Uplus Corp by mutual agreement
(joint marketing

B2B and Corporate clients Case specific and N/A

online contract specific
channels

Source: Samsung Electronics Co., Ltd, 2021 Half-year Business Report; p. 25

30
 Table 2.4. Overseas distributor classification

Classification Channel Collection Incidental expense

sharing

Retailer Retail store Case specific and Case specific cost

contract specific sharing as
determined by
mutual agreement
Dealer General merchandise Case specific and Case specific cost
store, discount store, contract specific sharing as
department store, determined by
online platforms mutual agreement
Distributor Direct sales to local Case specific and Case specific cost
distributors contract specific sharing as
determined by
mutual agreement
B2B and Corporate clients Case specific and N/A
online contract specific
channels

Source: Samsung Electronics Co., Ltd, 2021 Half-year Business Report; p. 25

Inbound Logistics

Logistics is handled in a unique way in Samsung so that it covers many administrative

processes. It is more complex than described in a basic value chain model. Recently,
Samsung establishes logistics companies as its subsidiaries. Samsung owns a major
subsidiary to handle the total logistic service named Samsung Electronics Logitech.

Samsung Electronics Logitech Co.,Ltd. is engaged in providing of logistics

management agency. The company offers products such as domestic logistics, such
as transport and distribution logistics, and delivery and installation services; and
international logistics, including overseas sales logistics, forwarding, trade support,
and transit trade processing trade. Samsung Electronics Logitech manages all
inbound and outbound logistics, as well as payments and processes with outsourced
firms, all while integrating with Samsung SDS's worldwide ERP system. For
example, core building blocks for components plus combined internally and
externally sourced components are allocated to the assembly factories, either from
Korea or directly to the overseas plant by Samsung Electronics Logitech.

31
Furthermore, Samsung also has Samsung Electronics Europe Logistics which is also
classified as major subsidiary.

Outbound logistics

The outward flow of products and services from a firm, or simply expressed as the
transfer of goods and services from a corporation to the market, is known as outbound
logistics. Samsung has created 36 manufacturing facilities across the globe. Products
made in the company's production and assembly facilities are shipped to markets all
over the world. Samsung Electronic Logitech also take responsibilities for
transporting products made by Samsung Electronics to around 120 countries
throughout the world. Apart from that, it also provides distribution and sales support
to Samsung Electronics for the sales and distribution of its products to customers
worldwide. Samsung products are often transported by air due to the high value of
products as well as strict requirement of delivery speed.

For instance, in Vietnam, Samsung Electronics Vietnam has cooperated with

Aviation Logistics Joint Stock Company (Aviation Logistics - ALS) and ASG
Logistics Joint Stock Company (B2B) and used the expanded warehouse service for
air cargo. SEV and SEVT respectively have their own expanded warehouse systems
in Bac Ninh and Thai Nguyen with the names Aviation Logistics Bac Ninh (ALSB)
and ASGL. SEV then took advantage of the freight services of ALS and ASGL to
bring finished products directly from its factory to the expanded warehouse system.
Then all necessary procedures such as weighing, measuring, documents preparation,
products stamping and custom declarations are proceeded accordingly. Finally,
products are brought directly by ALS and ASGL to ports and airports for delivery to
the carriers. This close system allows SEV and SEVT take greater control of their
products from the beginning to the end of domestic shipping process.

2.2.1.4. Other primary activities

Samsung's R&D activities

R&D activities of Samsung basically comprises of Technological and product

planning sector as well as Design and engineering sector. Samsung is endeavoring
with utmost efforts to maintain its leading position in the global IT industry and
become a worldwide leader in industrial technology by creating and securing next-
generation technology. Until June 30, 2021, the company recorded the R&D expenses
in 2021 as KRW 10,994.1 billion. Among this, KRW 10,823.1 billion was recognized
as expenditures, excluding government subsidies and capitalized expenses.

32
R&D has always exerted an important role on the entire business performance of
Samsung because the company's innovations and intellectual property are all
developed through R&D. Therefore, besides building R&D chain in Korea, Samsung
is also currently opening its R&D Centers overseas to expand its development in term
of technologies and innovations.

+ Domestics R&D Activities

Samsung operates three levels of R&D organizations.

(1) Samsung Advanced Institute of Technology is the central research institute of

Samsung Electronics that has been established to guide the company into the future
and act as a technology incubator. It also has an innovative R&D system that controls
R&D instructions for prospective growth areas at the corporate level, identifying
future growth engines and enhancing the company’s core technology
competitiveness.

(2) R&D institutes under each business unit that develops mid- to long-term
technology with a 3–5 year outlook. These centers focus on technologies that are
most likely to deliver the most desirable results over the mid-term. Each department
of the SEC has its own research lab, but they can completely entrust their projects to
SAIT or third-party institutes.

(3) Business unit development team under each Division that develops market ready
technologies with a 1–2 year outlook

+ Overseas R&D Activities

Samsung operates R&D organizations in the US (SRA), China (SRC-Beijing, SRC-

Nanjing, SRC-Guangzhou, SRC Shenzhen, and SSCR), India (SRI-Bangalore and
SRI-Delhi), Bangladesh (SRBD), Israel (SRIL and SIRC), Russia (SRR), Japan
(SRJ), to carry out research activities for product development and basic
technological research.

Samsung has also established AI centers in Cambridge (United Kingdom), Moscow

(Russia), Toronto (Canada), Montreal (Canada), and New York (United States), so
global team of researchers can collaborate with international experts to strengthen
capabilities in AI technology

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In Vietnam, Samsung Electronics Vietnam (SEV) started the construction of its
biggest research and development (R&D) center in Southeast Asia. With a total
investment of US$220 million, the new R&D center will be built over 11,603sq.m of
land; 79,511sq.m of floor area and expected to be completed in the latter half of 2022.
In addition to excellent research facilities for mobile and network technologies, the
new center will have a fitness center, club rooms, in-house restaurant, and rooftop
garden, creating a creative and comfortable working atmosphere. Upon operation, the
number of employees of Samsung Vietnam Mobile R&D Centre (SVMC) will
increase from 2000 up to 3,000. This is the first time Samsung Electronics has built
its own center which specialized to serve R&D activities overseas. It is also the largest
R&D center among FDI companies in Vietnam. The construction of the new R&D
Center marks a milestone in Samsung's 12-year investment journey in Vietnam.

Regarding product design, Samsung has product design centers located in 8 major
countries around the world (Samsung Design, 2021): Samsung Design Innovation
Center (San Francisco), Samsung Design China (Beijing and Shanghai), Samsung
Design Delhi (Delhi), Samsung Design Europe (London), Samsung Design Japan
(Tokyo), Seoul Design Office (Seoul), and Samsung Design Latin America (Sao
Paulo).

Marketing activities

As one of the most well-known technology companies, Samsung has tried its best
to maintain an excellent brand image. Samsung's brand image is built on the quality
of its products and its commitment to technical innovation. Samsung's smartphones
are popular due to their solid design and performance. In comparison to research and
development, however, marketing plays a minor part in Samsung's business. Despite
this, the firm has been able to enhance its market position and brand image by
focusing on product quality and innovation. Generally, each market has a unique
marketing and sales branch which will serve that market only.

One of three core sales strategy of Samsung in 2021 is strengthen marketing activities
to boost demand from customer/market. (Samsung Electronics Half year Business
Report, 2021, p25). Samsung is investing in marketing in order to boost its market
impact and brand recognition with the aim of expanding customer groups. It mostly
promotes its products through digital marketing channels. In-store promotions and
other traditional marketing and promotion channels, such as print media, are also used
by the company. Apart from paid online advertising, the company utilizes social
media channels to run marketing campaigns and to promote its smartphones to the

34
public. The company also actively invests in CSR and sustainability activities to
enhance strong social image and solid reputation in the long-term.

Sales activities

Samsung utilizes both online and offline channels for the sales of its smartphones and
other electronics products. Consumers are choosing to purchase more and more
through online channels as e-commerce trends continue to grow quickly. Samsung
has also increased its reliance on e-commerce networks for product sales and
distribution throughout the world.

In Vietnam, apart from offline stores, Samsung has its official website as well as
official flagship stores on e-commerce platforms such as LAZADA and SHOPEE.
Samsung conducts discounts on a regular basis on these platforms with the aim of
boosting sales to the fullest.

Services

In all of the markets where the company operates, Samsung has maintained a strong
focus on customer service. The firm uses internet platforms to give after-sales support
to its clients in addition to its huge network of service centers globally.

The majority of customer feedbacks can be submitted through a wide range of

methods. Communication is supported via 24/7 phone, live chat, emails and
Twitter/Whatsapp Product warranty registration can also be done online via the
website. Samsung's website also allows customers to request and track services
online. Customers can use toll-free numbers to reach out to customer service
representatives from Samsung electronics. There are now also several channels for
customer to book a service appointment through the Internet.

2.2.1.5. Supportive activities

Firm infrastructure

Samsung also possesses the most professional infrastructure of any Korean

corporations. In terms of financial support, investor relations, and the handling of
finance and investment funds are all those of a first rate organization. This goes as far
as creating venture funds to foster potential suppliers. The Samsung Venture
Investment Corporation (SVIC) is a subsidiary of Samsung that is responsible for
providing financial resources to start-up enterprises in the fields of information
technology, communications, semiconductors, electronics, and biotechnology.

35
HR management

The company, besides providing training and other critical resources that are
necessary to assist the employees achieve faster career growth and higher job
satisfaction, also offers competitive salaries as well as other benefits for its
employees.

Samsung notes in its 2021 Sustainability Report that “In every organization,
diversities such are sexual diversity, racial diversity, and people with disabilities
exist. At the same time, diversities also exist in people's values, experiences, views,
working styles, and preferences. Embracing diversity means not only acknowledging
differences but also respecting others as they are. Samsung Electronics aims to create
an inclusive corporate culture in which everyone respects the differences in
experiences and opinions, providing emotional support so that everyone can achieve
their full potential”.

Moreover, Samsung focused on bringing higher equity and encouraging women in its
organization to acquire faster growth through training and empowerment.

2.2.2. Economic indicators of Samsung Electronics Corporation’s supply chain

Table 2.5. Key economics performance

Unit: KRW billion

Year 2017 2018 2019 2020

Sales 239,6 243,8 230,4 236.8

Operating profit 53,6 58,9 27,8 36.0

Net income 42,2 44,3 21,7 26.4

Source: Samsung Electronics Sustainability Report 2021, p.77

Regarding sales figure, after decreasing slightly in 2019, sales recorded in 2020 rose
from 230,4 KRW trillion to 236,8 KRW trillion. There has been a significant increase
in the figure foe operating profit and net income of Samsung, which clearly announce
that the business performance of the corporation in term of economics is getting better
in spite of the continuous spread of Covid-19 in the world.

36
 Table 2.6. Sales by business division & region

Unit: KRW trillion

Year 2017 2018 2019 2020
CE 44,6 42,6 45,3 48,2

IM 106,7 100,7 107,3 99,6

Sales by business
division Semiconductor 74,2 86,3 64,9 72,9
(Absolute value)
Display Panel 34,5 32,5 31,1 30,6

Harman 7,1 8,8 10,1 9,2

CE 17 16 17 18

IM 40 37 42 38
Sales by business
division Semiconductor 28 32 25 28
(Ratio)
Display Panel 13 12 12 12

Harman 2 3 4 4

Americas 81 81,7 73,9 78,3

Europe 44,4 43 42,7 46,0

Sales by regions
China 38,3 43,2 38 37,8
(Absolute value)
South Korea 31,6 33,9 34,2 37,0

Asia & Africa 44,3 42 41,6 37,7

Americas 34 34 32 33

Sales by regions Europe 19 18 19 19

(Ratio) China 16 18 16 16

South Korea 13 14 15 16

37
 Asia & Africa 18 16 18 16

Source: Samsung Electronics Sustainability Report 2021, p.77

Table 2.7. Economic value distribution

Unit: KRW trillion

Year 2017 2018 2019 2020

[Suppliers]
Procurement costs 135,2 156 173,3 168,7

[Local Communities] Social

contributions 0,47 0,44 0,53 0,50

[Shareholders & Investors]

Dividends 5,8 9,6 9,6 20,3

[Shareholders & Investors]

Dividend payout ratio 14 22 45 78

[Creditors]
Interest expenses 0,7 0,7 0,7 0,6

[Employees]
Employment Costs 27,2 27,8 28,1 31,0

[Government]
Taxes and duties in 15,1 17,8 9,7 11,1
each region

Source: Samsung Electronics Sustainability Report 2021, p.77

Samsung's procurement costs for suppliers and social contributions both decreased
slightly compared to 2019. However, these figure are still higher than those of 2017
and 2018, which points out that Samsung still spend a big portion of cost for corporate
citizenship activities and supplier-related activities. Samsung's dividend payout ratio
to shareholders and investors almost doubled, from 45 to 78 trillion KRW. Samsung's

38
employee remuneration also rose slightly from KRW 28,1 trillion in 2019 to KRW
31.0 trillion in 2020, marked the fourth year of continuous increase.

Table 2.8. Ratio of economic value distribution

Unit: %

Local Shareholders Govern

Suppliers Creditors Employees
Communities & Investors ment

74 0,2 4,1 0,3 12 4,1

Source: Samsung Electronics Sustainability Report 2021, p.77

Samsung's greatest share of the economic value distribution is for suppliers with 74%,
followed by employees (12%) and shareholders, investors and the government with
4.1% respectively.

2.2.3. Social indicators of Samsung Electronics Corporation’s sustainable supply

chain
Samsung requests that international standards and regulations be abided by in the
areas of human rights management, work environment, ethics, and conflict mineral
issues with an aim to build an open and transparent management accountability
system that engages all stakeholders along the supply chain.
2.2.3.1. Workplace health and safety

The Health and Safety Management System is used to manage all of Samsung's
working areas. All workplaces have upgraded their present OHSAS 18001
certification to ISO 45001 (ISO 45001 is an international standard for an
Occupational Health and Safety (OH&S) management system). By the end of 2020,
all Samsung manufacturing facilities achieved ISO 45001 certification and developed
an OH&S management system that complied with the most recent ISO 45001.

Samsung is attempting to develop a Safe Work Environment by identifying risk

factors such as aging equipment, non-compliance with safety requirements, and a lack
of management and control at work sites as well as finding solutions to address these
risk factors. Samsung, for instance, developed a Facility Life Management System
(FLMS) to streamline the whole process of procurement, maintenance, replacement,
and disposal of equipment at workplace to avoid hazards associated to industrial

39
facilities. Samsung also gives regular training to employees so that they are well-
prepared to respond to any safety-related accidents arising during working. Drills
such as fire evacuation and earthquake and chemical spill reactions are included in
the training.

Thanks to those efforts, the injured rate decreased 4 years in row to only 0.006% in
2020.

Table 2.9. Safety rate

Unit: %

Year 2017 2018 2019 2020 Formula

No. of injuries ÷ annual total

Frequency rate work hours) x 1,000,000
0,086 0,036 0,059 0.031

No. of injured workers ÷ No.

Injuries rate of workers) x 100
0,017 0,008 0,009 0.006

Source: Samsung Electronics Sustainability Report 2021, p.79

Regarding employees’ health protection, Samsung is committed to supporting their

workers to maintain excellent health condition. For more than a decade, DS division
has operated a health research center, South Korea’s first research organization that
specializes in research on the health of employees and avoidance of occupational
hazards at workplaces. Meanwhile, the CE·IM divisions also runs the Health
Management Office. In addition, Samsung also helps employees improve their health
by providing a variety of health facilities and programs, such as in-house clinics and
pharmacy shops, exercise centers, physical therapy rooms, the center for the
prevention of musculoskeletal problems, and mental health counseling centers.

2.2.3.2. Human resources development

Samsung has launched Employee Training Programs to give leadership

development programs in order to foster innovative and bold leadership as well as
boost specialization at work. Samsung also provides support to enrich life after
retirement for all staffs.

40
Samsung allows their staffs to build their career development paths with their
managers and participate in relevant development programs. Employees may further
their careers by pursuing an MBA, academic training, job expert courses, regional
expert classes, and AI expert courses.

Samsung operates an internal job posting system to allow employees to transfer to

new departments so they can experience all working field. Since 2019, 1,657
employees applied for and successfully altered their job positions within the
corporation, not only domestically but also internationally.

Samsung also offers a variety of benefits to help employees be more satisfied at work,
maintain a healthy work-life balance, stay motivated, and be more engaged. The firm
contributes to private pension plans to assist employees in planning for and enjoying
a more rewarding retirement, as well as covering tuition and medical expenditures for
employees and their family members.

Table 2.10. Employment benefits package overview

Activities

Employees + Coverage of medical expenses for employees / spouses

Health /children
+ Coverage of medical expenses for treatment of disabilities or
critical diseases
+ Comprehensive medical check-ups
+ Operating of in-house clinics

Family Events + Time off and monetary support for celebrations or

bereavement leave
+ Providing of funeral-related support

Tuition Support + Support for kindergarten tuitions

+ Scholarships for elementary, middle, and high schools and
college
+ Leaves of absence for professional training or self-
development

Refreshment + Providing resort tickets at special price

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 Activities + Tickets to water theme parks
+ Fitness centers

Others + Employee discounts for Samsung products

+ Optional employee benefits
+ Financial support in case of fire or other natural disasters
+ Allowance for extended leave

Source: Samsung Electronics Sustainability report 2021, p.63

2.2.4. Environment indicators of Samsung Electronics Corporation’s sustainable

supply chain

Most recent economic growth success stories had a strong industrialization

component, which over time has resulted in pressures on the environment and the
natural resources base (European Commission, 2006). Samsung have fully
acknowledged the importance of protecting environmental values along the
corporation’s development history.

Samsung has given ultimate priority to the Environment segment when making
sustainability approach.

Samsung apply strictly the philosophy that “We work solely with Eco Partner-
certified suppliers so that we can assess and manage the environmental impact that
may occur in their components, raw materials, and manufacturing process.” Besides,
Samsung also takes actions with the vision “We provide new sustainable experiences
to customers through innovative environmentally conscious products and
technologies and lead the sustainable future of the global society.”

The company has set four key KPIs on issues of GHG emissions, water resources,
waste management, and energy efficiency. Samsung then tracks progress and
performance of these sectors to find out solutions in the years ahead.

2.2.4.1. Greenhouse emissions

Samsung is committed to ensuring the safe management of industrial process gases

and boosting renewable energy consumption to minimize GHG emissions at all
facilities. Samsung has increased the efficiency of its production and processing
processes, resulting in the maximum decrease in GHG emissions. Each workplace

42
calculates its annual GHG emissions, creates and promotes relevant action plans, and
outlines GHG reduction activities related to its working processes.

Table 2.11. GHG reduction activities

GHG reduction in + F-gas reduction facility operation in semiconductor

worksites production process
+ Implementation of GHG reduction Projects
+ Expansion of renewable energy use

GHG reduction + Reduction of GHG emissions in the product use phase by

during product use developing highly energy-efficient products
+ Development of low-power semiconductors with power
efficiency min. 10% higher than the previous generation
products

GHG reduction in + Management of GHG emissions from suppliers, logistics

other stages of the operations, employees' business trips, and electric vehicles
value chain

Reduction of Acquisition of carbon credits through external emissions

external GHG reduction projects including Clean Development
emission Mechanism

Source: Samsung Electronics Sustainability Report 2021, p.25

Table 2.12. GHG emissions reduction rate

Unit: million tons CO2e

2017 2018 2019 2020

Cumulative amount of reduction 217 243 270 301

Source: Samsung Electronics Sustainability Report 2021, p.81

From the table 2.12, it is recognized that Samsung basically succeeded in reducing
GHG emission within its supply chain. The cumulative amount of GHG emissions
reduction four years in a row proves that the efforts of Samsung in lessoning GHG
emissions paid off.

43
2.2.4.2. Energy efficiency

Each manufacturing site creates and implements programs that are appropriate to its
unique conditions and features in order to reduce energy usage.

The major energy-saving activities comprising:

+ Optimizing the capacity utilization rate of equipment such as HVAC systems,

freezers, air compressors, and pumps.

+ Blocking airflow in-between clean room doors, and adjusting the supply of air from
outside to maintain the positive pressure

+ Installing self-cleaning condensers to improve the efficiency of freezers

+ Adjusting the expanded polystyrene (EPS) shape molding machine’s steam

pressure

+ Maximize the utilization of renewable energy

Table 2.13. Energy consumption

2017 2018 2019 2020 Unit

Reduction rate of products’ 32

36 39 42 %
energy consumption

Renewable energy consumption 229 1356 3220 4032 GWh

Source: Samsung Electronics Sustainability Report 2021, p.81

Although there was a decrease in the reduction rate of energy consumption in

Samsung’s product, Samsung has tried to increase the consumption of renewable
energy within the supply chain. Currently, in USA, Europe and China, 100%
renewable energy has been utilized, and Samsung is making efforts to make this
100% renewable energy consumption available in all other workplaces.

2.2.4.3. Waste management

To reduce waste, Samsung is constantly upgrading its production and product design
processes. Below table is the overview of Samsung’s waste management process.

44
 Table 2.14. Waste management activities

Product + Operate an eco-design evaluation

Development + Evaluate eco-friendliness in the development phase
(resource efficiency, environmental hazardousness,
energy efficiency)

Waste Discharge + Set waste recycling rate targets

+ Develop waste treatment technology
+ Strengthen environmental impact reduction activities
(develop and switch to low-toxic substances, neutralize
toxic substances)

Waste Transport + Comply with conventions on the border control of

hazardous wastes
+ Monitor the routes of waste-carrying vehicles

Waste Treatment + Visit waste treatment service providers and check their
compliance level on a regular basis
+ Perform environmental assessments on treatment service
providers (operational capabilities, environmental
management)

Source: Samsung Electronics Sustainability Report 2021, p.34

Table 2.15. Waste management

2017 2018 2019 2020 Unit

Waste generated 1,146,812 1,210,521 1,099,197 1,181,741 ton

General waste 760,463 813,831 777,570 835,875 ton

Hazardous waste 386,349 396,690 321,627 345,866 ton

Waste processed 1,146,812 1,210,521 1,099,197 1,181,741 ton

Amount recycled 1,088,979 1,157,621 1,045,122 1,125,037 ton

45
Incinerated 32,301 31,377 30,664 30,146 ton
(outside the
company)

Landfilled 25,532 21,524 23,410 26,558 ton

(outside the
company)

Rate of waste 95 96 95 95 %
recycled

Source: Samsung Electronics Sustainability Report 2021, p.81

2.2.4.4. Water management

Samsung's Water Management Process reduces water usage while enhancing water
re-use rate through wastewater treatment. Every month, the Global Environment,
Health & Safety System (G-EHS system) records the amount of water reused in each
category and controls the status. Samsung also constructed underground water
pollution prevention systems, as well as internal and external facilities for safely
processing discharged water. Samsung imposes internal restrictions that go beyond
needed regulatory standards when dumping used water directly into a stream through
its in-house treatment facilities.

Samsung also makes daily efforts to enhance water reuse rates, such as optimizing
work areas, repairing obsolete valves, and increasing operating standards. Samsung
modified the control values process, replaced wastewater treatment systems, and
optimized operations at semiconductor factories with the highest water consumption.

Table 2.16. Water management

2017 2018 2019 2020 Unit

Water usage 120,618 134,230 134,479 142,294 ton

Industrial water 67,708 78,837 81,984 75,243 ton

Tap water 51,916 54,434 51,839 66,466 ton

Underground water 994 959 657 585 ton

46
 Waste water discharge 95,919 107,699 108,460 109,201 ton

Reused water 56,154 62,371 68,555 70,181 ton

Rate of water reused 46.5 46.4 50.9 49.3 %

Source: Samsung Electronics Sustainability Report 2021, p.81

Due to great efforts, Samsung reduced an average of 4,953 tons of water each day. In
2020, Samsung reused 70,181 thousand tons of water, a 1.2% increase compared to
that of last year.

2.4. Impacts of Covid-19 on a supply chain

The economic impact of the Covid-19 epidemic has been felt in practically every
area, but supply chain has been one of the most heavily impacted aspects of every
business. Not only have firms' supply chains been disrupted by constantly changing
border restrictions that cut off access to important suppliers, but demand for particular
items has also fluctuated wildly.

In late 2020, EY conducted a survey featuring 200 senior-level supply chain experts.
The study discovered three key findings: the pandemic's profound negative impact
on most respondents (72%), the shifting priorities for the supply chain industry
("increased visibility" being the top priority for the next 12-36 months), and the fact
that the pandemic has accelerated the transition to digitization (64% of surveyed
supply chain executives say digital transformation will accelerate due to the
pandemic).

The pandemic has undoubtedly exerted a profound impact on how businesses think
about the supply chain. The Covid-19 pandemic has highlighted the vulnerability of
supply networks due to lack of raw materials, industrial and transit disruptions as well
as social distancing. The system's shock, on the other hand, may bring in a new age
of improved communication and visibility between suppliers, as well as more
effective use of technology to speed up supply chain tactics.

2.4.1. Impacts of Covid-19 on consumer behaviors

Covid-19 affects consumers’ purchasing behavior for both essential and non-essential
products in different ways.

47
Demand for essential products such as foods and pharmaceutical products increased
dramatically led to temporary shortage of these products in the market. In addition,
Covid-19 has also disrupted the delivery of products to consumers through both
online and traditional distribution channels. The reason for the huge increase in
demand is that customers are anxious about the disruption in supply of essential
products, or they just simply mimic the behavior of others due to psychosocial factors.
This may cause bull-whip effect, in which retailers become highly reactive to sudden
increasing demand, and in turn, amplify expectations around it, which causes a
domino effect along the supply chain. Unexpected changes in consumer demand have
created supply chain uncertainty which affects both forecasting and decision making.

On the other hand, non-essential products demand experienced a downward trend.

Due to decrease in consumers' incomes, customers tend to save more, thus they do
not want to splash on unnecessary products. Consumers in both emerging and
developed economies have postponed larger expenditures, with those in emerging
economies focusing only on essential products. According to The United Nations
Conference on Trade and Development, the decline was the most pronounced for
travel & tourism, consumer electronics & ICT products, and fashion & accessories.
Therefore, electronics corporations may experience a huge decrease in sales within
the Covid-19 pandemic.

Finally, there has been a substantial change in consumer behavior since the first half
of 2020, forcing businesses to modify their business models and regulators to survive
in the market. The shift from in-person to online shopping was perhaps the most
apparent, but consumption was also impacted by strict limits on movement,
employees working remotely, and an unequal economic impact.
Some people accumulate savings due to their inability to spend, while others become
jobless or even homeless.

2.4.2. Impacts of Covid-19 on production activities

Covid-19 has exerted a devastating impact on the production activities of many

businesses in almost all sector, especially ones in industrial zone. For instance, in
Vietnam, due to the rapid increase in the number of positive cases in the production
plants, many companies needed to fit with the new working method of three-one-site.
They had to set up on-site sleeping arrangements for workers and put in place other
procedures to enable operations to continue while containing the virus. Now that
production activities have been restored, they are struggling to solve labor shortages
and build a defense system against the risks of the next possible Covid-19 wave.

48
Also, as mentioned in the report of the National Economics University “The
implementation of the social distance according to Directive 16 as well as three-one-
site places and one road – two destinations models are provoking huge difficulties for
businesses in terms of costs and risks in maintaining their operation. Since because
the physical conditions that meet "eat" and "stay" were not designed from the ground
up. A high portion of labor force living in big cities such as Hanoi, Ho Chi Minh City,
Hai Phong, Da Nang ... where the strict blockade order and social distancing rules are
set cannot go to the workplace, leading to the labor shortage in the industrial jones.

With the aim of boosting production in the post-pandemic situation, the Government
should give businesses the permission to get employees who are qualified for safety
(two shots of the vaccine or a negative test in 72 hours) back to work as well as
participate in normal business activities; especially the workers working in industrial
zones and enterprises in the supply chain that are separate from residential areas.

Enterprises have also been threatened of collapse as a result of temporary lockdowns

in countries where their critical supply chain partners operate. These businesses may
experience economic shock, reduced production capacity, less institutional supports,
and other societal issues in the medium to long term. Furthermore, some supply chain
partners may permanently shut down their businesses if they are unable to withstand
the loss from temporary shutdowns. In the recuperation period, this will provide
several obstacles. Due to fewer sourcing possibilities, companies may need to
purchase materials at greater rates (Sen, 2020). As a result, new supply chain alliances
would be required, disrupting current collaborations and connections (Chowdhury,
Sarkar, Paul, & Moktadir, 2020).

According to Choi Joo Ho, CEO of SEV, maintaining the supply network of industrial
parks is extremely important for businesses operating manufacturing plants, thus he
emphasized the need to build a mechanism to ensure "uninterrupted production". He
suggested that even in difficult circumstances, the production lines of factories will
not stop working, still operating according to standard guidelines and predetermined
routes.

2.4.3. Impacts of Covid-19 on transportation and logistics activities

2.4.3.1. Traffic control measures

In Vietnam, traffic control measures and the concept of "essential goods" have
hindered the transportation and circulation of goods," the report of the National
Economics University acknowledged.

49
The Ministry of Industry and Trade has proposed to the Prime Minister to allow
transportation and circulations of all goods types (not just necessities) under normal
conditions but still ensure the prevention and control of the Covid-19 epidemic and
business restrictions in accordance with current laws. Goods banned from trading or
restricted from trading can only be transported with the permission of the Prime
Minister. On the basis of the recommendation of the Ministry of Industry and Trade,
the Government has issued Official Letter No. 5187/VPCP-CN dated July 29, 2021
on facilitating the transportation of goods during the Covid-19 epidemic situation.

The proposal recommends clearly that: The Government should remove the
regulation on essential goods and service in Directive 16. Instead, the government
should mention the products and services that banned only, and replace the "green
channel" instruction with a another instruction that allows the vehicles to switch
routes of national highways, provincial roads and main routes (green routes) but
control carefully the vehicle drivers (must ensure that they are injected with 2 doses
of vaccines or PCR tested negative test for 72 hours) cannot park at local stops if not
instructed from higher authorities. Each local region should organize a logistics
center to unload and rotate goods for the needs of businesses and local residents;
assign patrol teams on national highways and provincial roads to ensure that goods
are not unloaded or transported outside the specifically allowed area. At petrol and
oil refueling stations, there must be a quick test area and drivers should be isolated
while vehicles are refueled as well.

Thanks to the timely instruction from the Government, the transportation and
circulation of goods between provinces and cities across the country is smoother,
helping to remove difficulties for many enterprises of inessential goods.

2.4.3.2. Increase in transportation cost

Prof. Dr. Heribert Dieter, Institute of International and Security Affairs, Germany,
said that the main obstacle to the recovery of the supply chain was transportation
costs, adding the cost of shipping containers from East Asia to Europe had increased
by nearly 10 times.

According to Vietnamnet, the German expert said the shift of the supply chain would
create opportunities for some economies like Vietnam or India but the negative
impacts on the supply chain would continue to linger, adding it would be difficult for
transportation costs to return to normal levels before 2023 or 2024.

50
Take the aviation an example, most high-value-added items, such as semiconductors,
computers, and wireless communication equipment, are transported by air since they
are more likely to get damaged during the shipment process. Furthermore, in the case
of medications and cosmetics, air transportation is also recommended in order to
manage the external environment, such as temperature. Additionally, the recent
increase in customer demand for express delivery has resulted in a preference for air
travel. The cost of air freight is skyrocketing as a result of the aforementioned factors.

Due to the reduction and suspension of flights following the recent outbreak of Covid-
19, freight transport rates temporarily increased. Strict travel ban restrictions and long
isolation period of crews further resulted in a large number of flight cancellations.
There was an overall 60% reduction in air passengers for both the international and
domestic markets in 2020 compared to 2019 (ICAO, 2021) as a result of entry
restrictions, long isolation period of crews, and a sharp decrease in willingness to
travel. Moreover, huge increase in fuel price also led to substantial increase in the
freight rate.

Table 2.17. Air freight for cargo from Hanoi

Destination: Hanoi Unit USD /kg, weight break: 1000kg

Short-haul & Incheon Sydney Beijing Singapore

Medium-haul

Pre-Covid-19 cost 1.35 6.0 1.25 2.5

Post-Covid-19 cost 3.0 10.0 2.7 5.0

Current cost 1.7 7.5 1.4 3.0

Long-haul Chicago Los Angeles London Vienna

Pre-Covid-19 cost 11 11 5 5.5

Post-Covid-19 cost 20 20 13 15

Current cost 14 14 7 8

From the Table 2.17, it is clear that after the Covid-19, even though the cost of short
and medium- haul cargo transport rose temporarily, transport costs have approached
a more stable stage but still quite high. Long-haul transport rates, on the other hand,
increased roughly threefold after the Covid-19, and the rate remains high due to the

51
restricted number of freighters and paxes. However, there is a reasonable chance that
transportation costs may fall as demand declines, owing to airlines' efforts to supply
additional cargo planes in order to recoup losses and the risk of further economic
recession in major exporting countries.

2.4.4. Impacts of Covid-19 on sustainable supply chain management

Regarding developing relationships between partners within a supply chain, the

limited interaction between sides due to Covid-19 causes incomplete information,
leading to ambiguity and inaccuracy. Companies also have difficulty in developing a
collaborative approach in the long-term due to the increase unexpected factors.
Businesses which are not affected by the pandemic may utilize the chances of other
suppliers being disrupted to raise price to get more profit.

Furthermore, social and environmental sustainability are both negatively impacted as

companies struggle to survive. Since the outbreak of the pandemic, businesses tend
to put less emphasis on sustainability-oriented activities.

2.5. Benefits of Samsung Electronics Corporation’s sustainable supply chain

during Covid-19 outbreak

2.5.1. Higher socio-economic and environmental value

In spite of the unprecedented disruption to global supply chains resulted from the
Covid-19 outbreak, Samsung Electronics Corporation’ social-economic and
environmental value still increased in 2020. According to Samsung Electronics
Sustainability Report, 2021, the entire value of sustainability management produced
by Samsung Electronics throughout the year 2020 was roughly KRW 47 trillion. Due
to increase in the net income, the financial value was KRW 26.41 trillion, up 21%
from 2019. Samsung enhanced support for future generations and continually
improved partner cooperation initiatives to improve the competitiveness of our
supply chain under the CSR goal of "Together for Tomorrow! Enabling People,"
which promotes socio-economic value creation. In addition, Samsung kept its
promise to use 100 percent renewable energy in the United States, Europe, and China
to boost the environment's worth. As a result, Samsung successfully created a total
socio-economic and environmental value of KRW 20.59 trillion) in 2020, doubled
the figures for 2018 and 2019.

52
 Figure 2.2. Socio-economic and environmental value

2020
20.59

2019
10.43

2018
10.58

0 5 10 15 20 25

Source: Samsung Electronics Sustainability Report 2021, 2021, p.75

2.5.2. Higher employees satisfaction

During Covid-19 pandemic, Samsung still embraced the philosophy of "People
First”, in which human rights, diversity, and inclusion are the top priorities of
management strategies. Putting beliefs into action, Samsung launched proactive
approaches to resolve situations that may violate human rights at work sites, as well
as actively supported for improving employees' skills and capabilities.
Samsung performed an annual employees’ satisfaction survey to
understand employees' needs, increase engagement, and enhance
the corporate culture. Samsung also took prompt actions to guarantee workplace
safety, such as evaluating our safety-first corporate culture, upgrading work
environment, and reinforcing chemical substance control.
According to Samsung Electronics Sustainability Report (2021), Samsung ranked 6th
in Corporate Human Rights Benchmark of The World Benchmarking Alliance, an
international organization which evaluates corporations’ compliance based on the
United Nations Guiding Principles on Business and Human Rights. Samsung
created a survey for employees on a yearly basis to assess the strengths and the fields
for enhancement of corporate culture. The Samsung Culture Index (SCI survey)
asks about the key values of the company: Work Smart, Think Hard, and Build Trust.
In 2020, about 170,000 employees from 135 locations participated in the survey,
despite the fact that Covid-19 prohibited manufacturing employees from

53
participating. Since the SCI was implemented in 2012, the scores have increased
yearly, and the overall score in 2020 was 84 (excluding employees in manufacturing),
reflecting that 84 percent of employees are contented with the company. The
employee satisfaction rate has been higher than 80% for 3 years in a row. Moreover,
the turn-over rate of Samsung employees recorded in 2020 was only 18.1%
(decreased 1% compared to the last two years). Through these data, it is clear that
Covid-19 has not impacted negatively the relationship between Samsung and
employees.
Table 2.18. Turnover rate
Unit: %

2017 2018 2019 2020

Turnover rate 17.1 17.9 19.5 18.1

Source: Samsung Electronics Sustainability Report 2021, 2021, p. 78

2.5.3. Higher customers satisfaction

Sustainable supply chain makes a difference through customer value created by
premium services (Christopher & Peck, 2004). The level of added service can be
represented through effective controlling of orders, product availability, on-time
delivery, transparent information and the ability of responsiveness. However, during
the Covid-19 outbreak, maintaining excellent customer services faces a lot of
difficulties and obstacles. As one of the most critical factors in obtaining competitive
advantages is customer satisfaction, Samsung has been dedicated to providing an
exceptional customer experience at every customer touch-point. Samsung has built a
customer-targeted strategy to accomplish the objective of "Differentiation of
customer experience through product quality and service innovation." This offers a
consistent, high-quality experience for consumers at every phase of their experience,
from product purchase and usage to any later interactions. Thanks to the efforts of
maintaining sustainable customer services activities, the customer satisfaction of
Samsung kept increasing 4 years in a row despite the adverse impacts of Covid-19.
Table 2.19. Customer satisfaction assessment
Unit: point/100

2017 2018 2019 2020

Customer satisfaction 83.9 85.4 85.4 86.7

Source: Samsung Electronics Sustainability Report 2020, 2020, p. 116

54
2.6 Samsung Electronics Corporation’s experiences in building sustainable
supply chain during Covid-19 outbreak

2.6.1. Selecting and evaluating suppliers

When seeking for new suppliers, Samsung assess candidates in five main areas
including procurement and quality, environment, health and safety, labor and human
rights, Eco-Partner certification, and financial condition. Samsung will only
cooperate with candidates who score at least 80 (out of 100) in each of the five
categories. To be more specific, Samsung uses a checklist based on the RBA Code of
Conduct and audit methodology to closely monitor areas that are clearly linked with
corporate social responsibility. For more comprehensive evaluations, Samsung
assigns in-house specialists to undertake on-site audits of suppliers, while third-party
organizations conduct credit ratings of their financial status. Samsung also includes
social obligations in the standard contract signed with first-tier suppliers, such as
adhering to the Samsung Electronics Environmental Standard, international labor
practice and human rights standards, and the Samsung Electronics Supplier Code of
Conduct.

As mentioned above, new suppliers that want to engage in the Samsung supplier
program must meet specific requirements before they can join the supplier network.
These requirements are broken down into three main areas as below:

+ Environment and safety: the registering company must fulfill the requirements in
terms of occupational safety, fire prevention equipment, occupational health,
hazardous substances, and environmental facility that Samsung has given forth
standards in the form of 22 articles. There are also eight items where compliance is
mandatory for any new supplier that wants to participate in Samsung’s supplier
network.

+ Labor rights: the firm undertakes onsite audits of interested suppliers on 20 articles
including voluntary work, compliance with work hour rules, and a prohibition on
discrimination. There are also three mandatory elements in the second category
including a ban on child labor, a guaranteed minimum pay, and a prohibition on
inhumane treatment.

+ Eco-partners: In terms of environmental policy, education & training, and the use
of hazardous chemicals, Samsung evaluates its suppliers' business operations and
performance. The suppliers that pass all the criteria are Eco-partner certified suppliers
that the company has business relationships with. Samsung has also developed a code

55
of conduct for its suppliers that they are required to adhere to if they want to remain
Samsung suppliers. Apart from guaranteeing compliance with local laws and
regulations, the code of conduct also ensures that suppliers manage their business
operations and workplace environment appropriately.

Samsung performs a detailed review of suppliers on a yearly basis to evaluate their

competitiveness and control potential risks. The assessment is based on eight criteria
including technology, quality, responsiveness, delivery, cost, EHS, financial
condition, and compliance with laws and regulations. It is carried out utilizing a
variety of approaches, including transaction data and data given by suppliers.
Because the assessment system is operated throughout the year, suppliers may use
the integrated procurement system to track and monitor their performance and risks
at any time. Based on performance assessment results, Samsung offers incentives to
suppliers that have performed well, including the preferential transaction allocations
for the following year and providing support programs. These suppliers are assisted
through a variety of programs and projects including the Win-Win Fund and the
Payment Support Fund, as well as logistics expenses, in order to provide materials
promptly during the Covid-19. Under-performing suppliers, on the other hand, are
required to take corrective actions and receive fewer orders and transactions.

2.6.2. Improving customer services

According to Jane Gosney, senior lecturer in marketing, Birmingham City Business
School, the consumer experience and service is of greater importance than the product
itself. Understanding the essential role of customer service to business performance,
Samsung Electronics Corporation put forward several goals to ensure the quality of
customer service even during the Covid-19 outbreak. The company aims at fostering
significant innovations throughout the service process from the consumers’
perspective, strengthening and enhancing communication with consumers,
improving customer service value through the offering of differentiated services, and
taking advantage of digital technology to quickly fulfilling customer requirements.

Customer safety is of utmost importance in Samsung Electronics Corporation.

Throughout the pandemic period, Samsung offers differentiated service for customers
to alleviate arising inconvenience. If customers are unable to access service centers
due to lockdowns or travel restrictions, Samsung’s team is willing to visit the
customers directly to assist with the product pickup and delivery. Furthermore,
Samsung now offers a video consultation service, which allows contact center
representatives to view the items in real situation and provide proper advice.
Moreover, the customer can give feedback or make an appointment easily through

56
online channel. Samsung encourages customers to communicate via 24/07 phone,
emails or Twitter and Whatapps. The company ensures that all customers opinions
sent via emails/ website link/ applications will never be neglected. Additionally, for
products whose warranties expire during times when customer service is limited due
to Covid-19, Samsung is offering a one-month warranty extension beginning on the
date when customer service resumes.

2.6.3. Boosting CSR activities

Understanding the huge benefits of CSR on the business performance, Samsung

Electronics Corporation tried to incorporate CSR activities into its business strategies.
Samsung has donated USD 29 million in cash and commodities to governments and
communities most impacted by Covid-19 since January 2021 to assist with relief
efforts, including the purchasing of medical equipment and hygiene kits. Samsung
also sends smartphones to quarantined patients so they may contact with their loved
ones, as well as air purifiers and other devices to hospitals and quarantine facilities.
Educational institutions are given tablets so that students can learn outside of the
school. For example, Samsung sent 1,000 Galaxy Tabs to the United Nations Refugee
Agency (UNHCR) for adolescents in African refugee camps whose educational
environment has been deteriorated owing to Covid-19. The Tabs were given to 15
schools and community centers in Kenya's refugee camps of Kakuma and Dadaab,
where they would be utilized for the UN Refugee Agency's Instant Network School
- an online learning program for refugee kids.

In Korea, among the first wave, Samsung provided company facilities for local
authorities to operate as a care center for patients to assist with the country’s
containment efforts. Samsung turned one of its staffs training centers in Yeongdeok
into a residential treatment center in March 2020. The clinic helped alleviate a
beds shortage in local hospitals by treating individuals with little or minor symptoms,
thus medical professionals can focus on treating others who were severely ill.
Volunteer medical personnel from three Samsung were assigned to the Yeongdeok
Center, where a joint support group was founded in collaboration with local authority
to care for Covid-19 patients.

In addition, Samsung also supplied basic home items, hand sanitizers, and
disinfection tissues to the disadvantaged and those under quarantine. Samsung also
donated KRW 23 billion to the Korea Disaster Relief Association and offered relief
supplies such as immunity-boosting health supplements for medical staff working in
medical centers all over the country.

57
According to Vietnamnews, in Vietnam, Samsung Electronics Vietnam gave VND
10 billion to the Vietnamese government for the prevention and management of the
Covid-19 epidemic including both cash and protective clothes. During this period,
employees donated about VND 1.6 billion through CSR kiosks and factory grassroots
labor union contributions for Covid-19 prevention and control in Vietnam.

Samsung Vietnam also provided the group's most modern smartphone devices to
serve testing and developing the application for Covid-19 in Vietnam, in order to
support the government in boosting the deployment of technological applications in
pandemic prevention. Samsung Vietnam also offered large-screen screens and
televisions to help authorities in their pandemic surveillance.

58
 CHAPTER 3

RECOMMENDATIONS FOR VIETNAMESE ENTERPRISES

ON BUILDING SUSTAINABLE SUPPLY CHAIN

3.1. Characteristics of Vietnamese enterprises’ supply chain

Supply chain in Vietnam also comprise of basic components as a typical supply chain
such as material supplier, manufacturer, distributors and customer. However, supply
chain in Vietnam has some unique characteristics.

A survey conducted by KPMG in Vietnam in May and June of 2021 with participation
of supply chain managers of several leading organizations from various industries,
company sizes, and with different supply chain maturities have pointed out that: The
alignment between organization’s business direction and supply chain operating
model is still low. There is also lack of real-time visibility of cost, service level,
inventory on the organization’ end-to-end supply chain. Organizations are not
provided with the most up-to-date technologies and are slow in respond to digital
transformation. The level of collaboration among departments within end-to-end
supply chain is not good as well.

Moreover, regarding the logistics sector, according to Dezan Shira & Associaties,
while the government has invested in upgrading the transport network, Vietnam
continues to depend on an inadequate road network and railway system. About port
infrastructure, Vietnam has total 320 ports. According to World Economic Forum,
Vietnam ranks 80 among 139 countries in the quality of port infrastructure.

Furthermore, Vietnam is a crucial manufacturer for a great deal of foreign

corporations such as Samsung, Apple, Nike, and so on. These companies shifted their
production lines to Vietnam and tend to turn Vietnam into the major production site
in the long-term due to cheap labor cost.

In contrast, Vietnam is endeavoring to become supplier for foreign companies; but

for products that require a high level of technical precision (like aerospace part,
premium electronics chips) Vietnam may not meet the requirements due to lack of
high-skilled labor force.

59
3.2. Opportunities and challenges in building sustainable supply chain in
Vietnam
3.2.1. Opportunities in building sustainable supply chain in Vietnam
3.2.1.1. Government’s support in term of sustainable supply chain development

Faced with the negative impact the Covid-19 pandemic has had on regional and
global economies, including interruptions to supply chains, ASEAN countries are
making greater efforts to recover and improve their responsiveness to future risks,
Minister of Industry and Trade Tran Tuan Anh said.

Specifically, the Ministry of Industry and Trade has issued many policies and
requirements to ensure smooth circulation of goods; at the same time, implementing
many solutions to "open up" foreign markets, helping Vietnamese agricultural
products to access markets even in the context of complicated epidemic
developments. Thanks to that, even in the most difficult period of the pandemic,
products such as Luc Ngan lychee, Thanh Ha lychee, Binh Thuan dragon fruit are
still exported to many markets around the world.

Along with that, the government also puts forward policies and timely support in
promoting production of enterprises and gives priority to vaccination for workers in
manufacturing enterprises, distribution enterprises or transportation enterprises.
These are the "lifeblood" industries of the economy which play a key role in ensuring
that the economy can continue to operate in the context of Covid-19.

The Ministry of Industry and Trade (MoIT) had a teleconference with Samsung
Electronics Vietnam and its suppliers, affirming that the ministry’s top priority now
is assisting businesses in Vietnam to achieve the “twin targets” of ensuring safety in
the context of the Covid-9 pandemic spread and maintaining production to avoid
supply chains disruption.

The Ministry of Information and Trade (MoIT), according to Deputy Minister Do

Thang Hai, is committed to working with other ministries, sectors, and localities to
help businesses and alleviate bottlenecks in production by increasing manpower,
easing travel restrictions between provinces, increasing vaccination, and lowering
input costs, expenses, and taxes.

On September 25, 2020, the Government issued Resolution No. 136/NQ-CP on

sustainable development. The resolution has set out 17 sustainable development goals
by 2030 for Vietnam. The Ministry of Industry and Trade is assigned with several
tasks including organizing the implementation of the National Action Program on

60
sustainable production and consumption for the period 2021 – 2030; completing
policies on sustainable production and consumption; promoting the greening of the
distribution system and develop the national supply chain of eco-friendly products
and services; giving priority to products manufactured and supplied by small and
medium-sized enterprises; and promoting the development of environment
protection.

3.2.1.2. Increasing awareness of customers about sustainability

The IBM Institute for Business Value (IBV) recently conducted a survey of 14,000
people from 9 countries on issues related to the environment and sustainable
consumption. As a result, 90% of respondents have changed their views on this issue
since the pandemic occurred; 55% of consumers say sustainability is very or very
important when choosing a brand; 62% of consumers are also willing to change their
buying behavior to reduce their negative impact on the environment.

The results of a survey conducted by Accenture PLC - a Fortune Global 500 company
- in April 2020 also showed that 60% of consumers want to buy environment-friendly
products. Using less plastic was a priority for consumers before Covid-19, but now
top concerns are also climate change and the environment.

Sustainability has become an important factor that modern consumers consider when
making purchase. There are 71% of consumers worldwide consider climate change
as important as Covid-19. Therefore, they are willing to contribute to a sustainable
living environment through spending on products that are certified "green", "zero-
environmental impact”.

Consumers are more likely to give preference for brands that are committed to
making the world a greener place. As a result, businesses will need to change their
production and business models from traditional sourcing toward developing a
production process that does not pollute or negatively impact the environment, as
well as distributing "green label" products that are environment-friendly to
consumers.

In Vietnam, although there is no official data on the transformation of consumers'

perception of sustainable values during the pandemic period, it can be seen that
sustainable consumption is getting more and more attention in Vietnam from both
consumers and businesses.

61
3.2.2. Challenges in building sustainable supply chain in Vietnam
3.2.2.1. Responses to huge demand

The first challenge on a country level is to meet the demand of this massive influx of
FDIs and supply chain reconfiguration. Southeast Asian nations are welcoming FDIs
by building industrial parks, developing more ports and logistics routes, and adjusting
tax incentive policies (Jibiki, 2020; Fukuoka, 2020).

Vietnam is reported to face the risk of exceeding its current capacity in terms of
skilled labors (IT talents, middle managers) and land occupancy (Hoang, 2020c).
Industrial zones are occupied at 74% nation-wide, while those in the south nearly
reach full occupancy rate. Moreover, congested ports place a burden on stuffed
containers handling, which may result in shortage of logistics infrastructures and
equipment.

There is also a shortage of suppliers in response to a large demand, as some inputs

still have to be sourced from China (Hoang, 2020). To meet the strict requirements
and various criteria to become well-evaluated suppliers for sustainable supply chain,
Organizations must strive to keep up by establishing high standards for
environmental-targeted operations and the safety of employees, expanding training
programs, boosting skills, and pursuing digitalization. Southeast Asian suppliers,
particularly in the medical and pharmaceuticals industries, must meet stringent
requirements. To ensure quality control and pass the regular assessment procedure,
manufacturing processes and product components must also attain a high degree of
accuracy.

3.2.2.2. Limits resulted from customer’s purchasing behavior

According to Deloitte, Vietnamese consumers’ household income per month in

average is mainly ranging from 10 million to 20 million. Moreover, among the top
attributes driving consumers’ purchasing behavior, the price often accounts for 15%,
just 5% lower than the figure for the quality. It means that the purchasing preference
of Vietnamese consumers may be substantially affected by the price attribute.
Therefore, with the low income level, Vietnamese customer still prefer items that cost
them less money when making comparison among options.

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 Figure 3.1. Vietnamese monthly household income level

> 40 million
1%

20 to 39 million
14%

15 to 19 million
33%

10 to 14 million
36%

5 to 9 million
15%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Source: Deloitte’s Vietnam Consumer Survey (2019)

As mentioned above, there is a fact that Vietnamese consumers generally tend to buy
products with the lower price. However, businesses that develop towards sustainable
aim require a huge investment in technology and production processes, and therefore,
their products may be more expensive than conventional products. For instance, if a
company wants to be more sustainable in environment sector, their products must be
greener. In order to do that, they may choose to avoid using cheaper plastic packaging
and follow greener polices such as using renewable energy like solar panels.
Moreover, it also requires providing employees with a fair and equitable salary level.
In a recent survey conducted by HBR, 65% of consumers said they want to buy from
purpose-driven brands that advocate sustainability, but only about 26% actually do
so. In Vietnam, this figure may be even lower. Therefore, sustainable requirements
will make sustainable development-oriented businesses have greater difficulties in
getting profit.

3.2.2.3. Limits of Vietnam corporations’ resources

According to the report of the Dezan Shira and Associates, SMEs continue to play a
major role in Vietnam, accounting for 98 percent of all enterprises, 40 percent of
GDP, and 50 percent of employment or 1.2 million jobs. As per the Ministry of
Finance, Vietnam has more than 600,000 firms, with nearly 500,000 private and 96
percent being small and micro-enterprises. The implementation of CSR in
63
Vietnamese enterprises are facing many difficulties and limitations. The first reason
is the lack of the financial resources, personnel, and size of the business. Moreover,
Vietnamese SMEs focus more on maximizing profits than on social responsibility.
Some recent studies concluded that Vietnamese enterprises which have integrated
CSR into their business strategy regularly are multinational, large or export
companies. Meanwhile, many SMEs in Vietnam are not fully aware of CSR, and the
benefits as well as opportunities that CSR can bring to the business. They frequently
focus only on exploiting available resources to maximize profits but forget the
interests of customers and responsibility to laborers, environment, community and
the future generations.

3.3. Recommendations for Vietnamese enterprises on building sustainable

supply chain

3.3.1. Developing the production process

Vietnamese enterprises should invest their resources more in R&D to generate

competitive advantages in the long-term since developing sustainably requires the
huge involvement of technology. Besides, R&D is also an activity that requires a lot
of financial and intellectual investment so enterprises should make more
consideration towards R&D activities from the very beginning. In Vietnam, R&D is
mainly focused in larger companies. As per the report from Dezan Shira and
Associates, R&D spending in the private sector accounts for only about 3% of overall
expenditure, leading to lower efficiency and higher manufacturing costs. If domestic
enterprises aim at competing with international firms as the global economy develops
toward Industry 4.0, they must focus on digitization and innovation. Through
programs that encourage research and technological development, the government
may collaborate with organizations to help SMEs improve their technological
capabilities.

Heading towards the sustainability-oriented purpose, Vietnamese enterprises may

find out solutions to minimize their ecological footprints and incur the associated
added costs through cleaner products and production strategies.

The production line also needs to be paid more attention by businesses on issues
related to sustainability. Specifically, in terms of water management, enterprises need
to optimize the reuse rate of waste water through optimizing workplaces, replacing
old water valves and improving operating standards. The company also needed to
make architectural improvements such as improving production processes and setting
up a qualified recycling system. Based on the characteristics of each local regions,

64
enterprises should consider treating input water sources or building dykes to prevent
floods. Regarding waste treatment, enterprises need to have a strategy to develop
waste treatment technology, such as purchasing modern recycling technologies from
overseas if needed.

Regarding products, Vietnamese companies need to invest more in environmental-

friendly products by trying to achieve green labels (Eco-label) and environmental
certificates. Businesses should start researching on smart ways of handling wastes
from the production process and the use of packaging made from environmental-
friendly substances.

3.3.2. Developing the relationship with suppliers

Even with the support of the modern technology, participating actively in all business
stages of a thousand-member supply chain is both not feasible and wise. Companies
may want to put a little more emphasis to whom they consider the most potential and
suitable.

Currently, most Vietnamese enterprises are small and medium-sized enterprises,

therefore they are not able to implement financial and resources support for suppliers.
However, Vietnamese enterprises may increase their control and evaluation over
suppliers on various factors namely product quality, working environment and
environmental friendliness. Vietnamese enterprises may adopt a fair and transparent
process in operating supplier registration system for new suppliers while performing
annual assessments to co-operate with suppliers in reinforcing competitive edge and
minimizing relevant risks This also can be done through the development of a detailed
system of criteria for evaluating and selecting suppliers, including: purchasing
activities and product quality; environment, health and safety; labor and human
rights. Businesses can set a score base for each of the above criteria, and only select
suppliers that have passed the required score level. In addition, to ensure that
suppliers have been and are strictly committing to their sustainability commitments,
businesses can conduct on-site audits or audits through a random third party with
suppliers. Furthermore, this can also be done by including social responsibility
provisions in the contracts the business will sign with its suppliers. Last but not least,
Vietnamese enterprises can also incentivize suppliers to abide by sustainable
operating principles by giving privileges and preference in the long-term to suppliers
who comply well with regulations. .

To be more specific, Vietnamese enterprises may set detailed criteria such as:
Suppliers shall ensure safe working conditions, treat its employees with respect and

65
dignity, ensure all business operations are operated in an environmentally friendly
and responsible manner, and conduct all of its activities ethically and in full
compliance with all applicable laws, rules and regulations of the country in which the
supplier operates its business and in Vietnam as well. These standards should be
mentioned clearly from the beginning of co-operation process with suppliers to
ensure that both parties acknowledge and follow strictly.

3.3.3. Developing the relationship with distribution partners

One of the most effective ways to improve the sustainability of the supply chain while
contributing to building relationships with distributors is to expand the distribution
network through the form of online shipping - home delivery.

Due to the highly infectious nature of the Covid-19 virus and the convenience of
online ordering and delivery, there has been a significant increase in contactless
goods purchase and sale services. According to a survey by US market research firm
- Forrester, in 2020, 58% of consumers choose to spend online, up 12% from pre-
pandemic levels.

In many respects, not only affected by the epidemic, the increasing number of online
consumers is also due to Generation Z - the generation born after the internet became
widely available, exposed and used. Technology from a young age - is gradually
becoming the main population force today. Therefore, the application of digital
technology in spending and shopping is an inevitable trend of modern young
consumers.

In the next 5-10 years, Generation Z will replace the entire global
workforce. Accordingly, e-commerce business not only meets the changing needs of
the present but also anticipates future consumption trends. According to UNCTAD,
e-commerce sales in 2019 reached $26.7 trillion, accounting for about 30% of global
GDP, including business-to-business (B2B) and business-to-consumer sales.
(B2C). In 2021, according to eMarketer, the global e-commerce market is expected
to reach $4.89 trillion. Specifically, Vietnamese businesses should cooperate with the
above major e-commerce platforms in Vietnam today such as Shopee, Tiki and
Lazada in terms of goods distribution and product promotion. This measure both
meets the safety requirements in the context of Covid-19 which is in line with the
current trend of consumers, and at the same time also helps businesses to expand their
distribution channels with more customers with less money spent.

66
3.3.4. Developing the relationship with customers
3.3.4.1. Emphasis on products and service quality
Nowadays, consumers are getting “smarter” and more inclined to use electronic
devices and technology a lot. Customers require customer-oriented products and
services that can meet their needs promptly. If any problems arise, they want to
receive respond rapidly and through a convenient channel. Moreover, because
customers are more conscious about the environment and sustainability, their demand
for environment-friendly also experiences a sharp rise in recent years. Therefore, to
build and develop a sustainable relationship with customers, businesses first need to
satisfy consumers with high-quality products and services while ensuring social
responsibly and environmental protection.
To achieve that goal, Vietnamese enterprises need to put greater emphasis on
controlling the quality of products and services by setting up clear standards and
regulations that are systematized and disseminated to the entire company. These
criteria should also be informed to customers through marketing activities to ensure
that customers will acknowledge the value they get when purchasing products and
using services, leading to better customer experience and brand/product awareness.

3.3.4.2. Emphasis on CSR activities

Vietnamese enterprises should also invest more in CSR activities because there has
been a huge change recorded in public perceptions over the role of business in
society. There are expectations that businesses will come up with solutions to many
of the twenty-first century’s main social and environmental challenges, such as water
accessibility, global warming, climate change, and affordable health care. In
Vietnam, many big companies are already aware that to grow sustainably,
organizations must adhere to the principles of environmental protection, gender
equality, equal pay, labor safety, labor rights, talent management, and community
growth. They implemented hundreds of actions; such as saving energy, using
recycled materials, reducing carbon emissions, or some donation as the school
building, help sufferers of natural disasters. Studies have pointed out that CSR helps
to improve the image and reputation of the business; increase sale volumes; increase
employee motivation, increase attractiveness to potential recruits, and bridge the gap
between enterprises and customers.
Therefore, even when Vietnamese firms are almost small and medium-sized
companies, they should be more aware of the importance of CSR activities and put
them into mid-term and long-term strategy from the beginning.

67
3.3.5. Developing the relationship with labor force

Vietnamese enterprises need to pay more attention to the international and national
legal system on human rights and labor rights in enterprises. Specifically, the policy
system on labor rights and human rights of Vietnamese enterprises should be built on
a wider variety of international documents and documents, such as declarations,
principles, guidelines, documents international editions, and conferences. To be more
detailed, Vietnamese enterprises should have a set of labor and human rights policies
based on the Universal Declaration of Human Rights, the United Nations Guiding
Principles on Business and Human Rights (UNGPs); Organization for Economic Co-
operation and Development (OECD) Guidelines for Multinational Enterprises; UN
Convention on the Rights of the Child (UNCRC); International Labor Organization
(ILO) Declaration on Fundamental Principles and Rights at Work.

Programs on training future skills and career guidance for employees need to be
deployed more by Vietnamese enterprises. They should provide employees with
training programs tailored to each worksite to increase the quality of the company’s
personnel. Moreover, Vietnamese enterprises may be more transparent and open to
their employees about their rights by offering training customized to job functions.
After developing training materials tailored to the job responsibilities of all
employees, enterprises should launch comprehensive labor and human rights and
relevant topics training programs every year.

For companies whose production process can be prone to health and safety for
workers and employees, creating and maintaining a safe and employee-friendly
working environment is of utmost importance. Enterprises should provide regular
training to prepare employees to respond to safety-related accidents. Moreover,
enterprises should also support their employees in improving their wellbeing by
running various health facilities and health promotion programs.

68
 CONCLUSION

In conclusion, this research has provided basic knowledge about the supply chain,
sustainable supply chain management, and supply chain sustainability indicators.
From these, this research analyzes the supply chain of Samsung Electronics
Corporation and assesses its sustainability based on indicators of each dimension
including economic, environmental, and social. Samsung Electronics Corporation's
supply chain can be considered sustainable because it satisfies almost all indicators
and attribute categories of the three aforementioned dimensions.
In this research, the huge impacts of Covid-19 on supply chain components are also
stated. Since there are multiple stages involved in a supply chain, the effect of Covid-
19 can be presented through every sector, namely production line, transportation.
Therefore, organizations must figure out unique and effective solutions to adapt
promptly to the new situation. Samsung is making utmost endeavors to deal with
challenges arouse within the supply chain during the Covid-19 pandemic by flexibly
modifying its business strategies and giving greater priority to the sustainability
sector. Therefore, in 2020, the socio-economic and environmental value, employee
satisfaction, and customer satisfaction created by Samsung Electronics Corporation
still experienced a substantial increase, which states clearly the benefits of the
sustainable supply chain towards sustainable development in the long run regardless
of negative impacts of the global pandemic in the last three years.
From the case of Samsung Electronics Corporations, it is recognized that building a
sustainable supply chain is a process of creating and developing sustainable
relationships with all components within the supply chain including stakeholders,
suppliers, distributors, customers, employees. To foster all these relationships,
Vietnamese enterprises need to be conscious and serious. Vietnamese enterprises
should also stimulate large-scale and considerable investments in sustainable
development goals.
Although Vietnamese enterprises are merely aware of the importance of sustainable
supply chain development, most of them do not consider it as a worthwhile
investment. The main reason is that most Vietnamese enterprises are small and
medium-sized enterprises, thus the financial and technical resources for the
implementation of sustainable standards for the whole supply chain is in shortage.
Therefore, they are urgently needing greater support from the government in terms of
resources, especially during Covid-19 pandemic, to be able to maintain their business
operation and pursue sustainable development goals.

69
However, this research is certainly not free from some limits. First, although
sustainable supply chain is raising great concern from academics, it is still not popular
with the majority of society. Therefore, it is extremely difficult to collect practical
feedback either online or in person. Consequently, this research lacks certain
necessary databases to assess the importance of sustainable supply chain towards the
whole society and the most alarming impacts of Covid-19 on the supply chain
performance in reality. Furthermore, this research also has tremendous obstacles in
providing precise statistical evaluation criteria for the sustainability measurement of
the supply chain as these require thorough comparison between attribute categories.
Second, although Vietnam is well-known as one of the most potential economies in
Asia, the supply chains in Vietnam have not yet merited adequate attention from
researchers. Therefore, the thesis fails to offer thorough statistics related to
sustainable supply chain in Vietnam.
Moreover, since it is impossible to get access to some private databases, either of
Samsung Electronics Corporation or other organizations, such as corporate
relationships or personal data of customers due to the natural characteristics of
privacy of the whole category, the process of finding and comparing the sustainability
tactics and activities between Samsung Electronics Corporation and Vietnamese
enterprises also faces enormous difficulties. It is hoped that in the future there would
be more studies conducted on the sustainable supply chain of Vietnamese enterprises,
and those studies would successfully cover the weaknesses of this research.

70
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 APPENDIXES
Appendix 1. History background of Samsung Electronics Corporation

Time period Events

1969-1979 Diversifying in electronics: Samsung Electronics was formed

in 1969 and immediately established itself as a significant
Korean manufacturer. The company began exporting its goods
for the first time during this first era, thanks to a spurt of growth
from the booming home electronics market. Samsung
Electronics also acquired a 50 percent stake in Korea
Semiconductor, bolstering its position as a semiconductor
manufacturing leader.

1980-1989 Entering the global marketplace: During the late 1970s and
early 1980s, Samsung Electronics' core technological
businesses diversified and grew internationally. Samsung
Electronics' increasing specialization in technology resulted in
the establishment of two research and development (R&D)
institutes to expand its reach even further into electronics,
semiconductors, optical telecommunications, and new fields of
technology innovation ranging from nanotechnology to
advanced network architectures.

1990-1993 Competing in a changing tech world: High-tech companies

faced enormous obstacles in the early 1990s. Mergers,
coalitions and buy-outs were common while competition and
consolidation flourished. Business began to flow globally
between nations and companies from different regions.
Samsung Electronics took advantage of these opportunities by
refining its business approach to adapt more quickly to
increasing market demands and customers’ expectations.

1994-1996 Becoming a global force: Samsung Electronics revolutionized

its company in the mid-1990s by focusing on producing world-
class products, guaranteeing excellent customer experience, and
being a good corporate citizen, all while adhering to the quality-
first and customer-first philosophy.

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1997-1999 Advancing the digital frontier: Although practically all Korean
firms were damaged by the 1997 financial crisis, Samsung
Electronics was one of the few to continue expanding the
business, thanks to its leadership in digital and network
technologies and its consistent focus on electronics, finance, and
associated services.

2000-2004 Pioneering the digital age: The digital age has brought
revolutionary change and opportunity to global business and
Samsung Electronics has responded with advanced
technologies, competitive products and constant innovation.

2005-Present Fortune global top company: With the success of its electronics
business, Samsung has been recognized globally as an industry
leader in technology and now ranked as a top 10 global brand.

Source: https://www.samsung.com/us/aboutsamsung/company/history

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Appendix 2. Development history of Samsung Electronics Vietnam Company
(SEV)
Time Events
The first mobile phone factory project in Bac Ninh – SEV
25/03/2008
received the investment certificate
04/2008 The construction of SEV officially started.
SEV reached a capacity of 1.5 million products per month.
2009 At the end of the year, the factory’s export value reached 245
million USD.
The introduction of the Galaxy Smart Phone with Android
2010
system and the first 3D TV in Vietnam.
At the end of 2012, Samsung continued to receive the
investment certificate for the second project which worths
830 million USD. This project was later merged with the first
2012
project and laid the first brick for the formation of a "high-
tech city" in Bac Ninh.
LED TV was also introduced in Vietnam
Samsung Group Chairman Lee Kun Hee visited Vietnam.
Just a few months later, Samsung got the investment
10/2012
certificate in Thai Nguyen with the total capital investment of
2 billion USD
The construction of Samsung Electronics Vietnam Thai
25/03/2013 Nguyen (SEVT) officially started leading to the formation of
the second Samsung technology complex in Vietnam.
SEV continued to increase capital investment by 1 billion
USD, turning SEV into Samsung Complex. Total investment
06/2013
capital has reached 2.5 billion USD, 4 times as the original
investment.
Samsung Vietnam Electronics Thai Nguyen (SEVT) started
03/2014
production. The total capital investment reach 5 billion USD.
Samsung Display Vietnam (SDV) was constructed in Yen
07/2014
Phong, Bac Ninh.

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 Samsung officially had the third high-tech complex in
Vietnam, Samsung Electronics Ho Chi Minh Complex
01/10/2014
(SEHC) with the initial investment capital of 1.4 billion USD,
which was increased to 2 billion USD later.

Source: VNexpress, 2018

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