the final report enterprise information systems course

The objectives of the project1 General objective Survey and analysis of the procurement process of Vinamilk company.2 Specific objectives - Researching and analyzing the Vinamilk company

THE FINAL REPORTENTERPRISE INFORMATION SYSTEMS COURSE

I The objectives of the project

1) General objective

Survey and analysis of the procurement process of Vinamilk company.2) Specific objectives

- Researching and analyzing the Vinamilk company’s ERP system

- Analyzing and surveying the procurement process of the ERP system ofVinamilk company

- Analyze the procurement process of Vinamilk and describe the businessprocess through BPMN

- Compare and evaluate Nestlé company’s procurement process with theGBI’s sales process

3) Scope of the project

- Execution time: April 5, 2023 to May 5, 2023

- Space: Survey the procurement process of Vinamilk company

II Introduction to Vinamilk company

1) Introduction to Vinamilk company and business areas

a) Overview

Vinamilk, which stands for Vietnam Dairy Products Joint Stock Company, wasestablished in 1976 as the state-owned Southern Coffee-Dairy It has reached thetitle of the biggest dairy company and has been listed as 15" largest companycurrently Vinamilk has dominated approximately 75% of the milk market ofour nation and this company has a solid distribution network which spreadthrough 64 provinces with 183 distributors and 94000 points of sale; also,

Vinamilk has exported their products to other countries such as Netherland, TheUnited States, France, Canada, and Germany and so on.

Vinamilk has continuously been the biggest dairy company in Vietnam since itsestablishment in 1976 and its current market shares account for 50% in theVietnam dairy field Vinamilk's growth rate of total sales, profit before taxes andaverage equity in 5 recent years have been 31%, 31% and 28% Total revenue ofthis company in 2013 was approximately 1.5 billion USD and it is expected toreach 3 billion USD of total revenue in 2017

In 2013, 2 milk farms of Vinamilk were given ISO 9001:2008 Certificate forreaching the standard by the Bureau Veritas Organization from France.Currently, it has 5 milk farms throughout the country and in the near future itwill invest in expanding its milk farms with advanced technology, which willbring Vinamilk to a higher stage of standard dairy company with internationalquality

b) Business areas

Vinamilk concentrate on 4 areas:

- Production and business of boxed milk, powdered milk, nutritionalpowder, cakes, fresh milk, soy milk, soft drinks and other products madefrom milk;

- Business of industrial food, equipment, materials, chemicals andingredients;

- Production and sale of wine, beer, beverages, processed food, tea, roastedand ground coffee, instant coffee;

- Production and sale of packaging, printing on packaging, production andsale of plastic products

2) Business strategies, mission, business objectives, core values

a) Core values

Integrity - Respect - Equity - Morality - Compliance

b) VISION – “Becoming the number one belief symbol in Vietnam aboutnutrition and health products serving people lives”

MISSION – “Vinamilk commits to provide the community with the bestand highest quality source of nutrition which derived from respect, love andresponsibility for people lives and society”

c) Business objectives and strategies

Maintaining the No.1 position in Vietnam market and aiming to reach the Top

30 of World’s Largest Dairy Companies in terms of revenue, Vinamilk hasidentified a development strategy with three main pillars for execution,including:

- Leading in highly applicable innovations

Focus on dairy industry and dairy related products, which is the core businessthat has established the Vinamilk brands Continue to R&D to develop morenew products with innovations; expand and diversify portfolio based onconsumers’ preferences and demands; as well as bring various and convenientexperiences to them

- Consolidating the leading position in the vietnam’s dairy industryPrioritize to exploit the domestic market which still has great growth potential.Promote more on high end and added value products, especially in urban areas.Penetrate and cover rural areas with mainstream products that growth potentialare large Continue to build a large and strong domestic distribution system,increase market share and maintain Vinamilk’s leading position in the market

- Becoming the most valuable dairy company in the southeast asia

Be ready for M&A activities and expand strong cooperation with partners in allthree directions of horizontal, vertical and combined integration; Prioritize toseek M&A opportunities with dairy companies in other countries for the

purpose of expanding the market and increasing sales Continuing to penetratenew export markets with the strategy of converting the traditional goods exportmodel into types

3) Vinamilk Organizational Structure

III) Introduction to Vinamilk company’s ERP system

1) Definition of Enterprise Resource Planning (ERP)

An enterprise-wide set of management tools that balances demand andsupply, containing the ability to link customers and suppliers into acomplete supply chain, employing proven business processes fordecision-making and providing high degrees of cross-functional

integration among sales, marketing, manufacturing, operations, logistics,purchasing, finance, new product development and human resources,thereby enabling people to run their business with high levels of customerservice and productivity and simultaneously lower costs and inventories;and providing the foundation for effective e-commerce

2) When does Vinamilk need ERP?

Before Vinamilk's ERP system was applied to production and businessmanagement activities, only using manual tools such as Excel or oldsoftware such as Foxpro in management caused many difficulties.Directly affecting business operations:

- Input and output goods are managed completely manually; goodsare in stock in large quantities; and the working capacity andoperation of machines, equipment, and workers cannot beoptimized directly to affect the profits of the organization

- The number of archived papers is large, making it easy to makemistakes and leading to unexpected loss and damage

- There is no synchronization in control between stages fromproduction to order processing and accounting, leading to anincrease in production costs, warehousing costs, and inventory

- Handing over work information and data between

departments, users have to manipulate manually, which takes a lot

of time and effort, but the productivity is low, the data is notsynchronized, and there is easy loss

- The recording, accounting, and financial reporting—accountingfaces many difficulties in the process of data aggregation andmaking quick reports on business, production, and financialresults, leading to management decisions that are not treatedaccurately and in a timely manner

3) What are the benefits and Business values of ERP?

- Reliable accounting profession

With the accounting module, the ERP system gives businesses reliableaccounting, limiting unwanted errors due to employee confusion.

- Effective information control

Information from all departments is reduced to one source to helphomogenize it and limit errors and omissions of data In addition, thisalso makes data retrieval easier and faster Can be shared for many otherobjects to use, such as shareholders, customers,

- Complete order processing

Information such as delivery schedule, inventory, goods purchase and salehistories, and the customer's credit limit will be automatically and fullyupdated by the ERP system in real-time, helping to process orderseffectively

- Increase competitiveness

ERP systems create consistency in the business, bringing about goodcoordination across the company When a change occurs in a certaindepartment, other departments can also grasp the situation and improviseflexibly and quickly Bringing maximum working efficiency, increasedproductivity, increased business strength, and improved competitiveness

- Improve the efficiency of human resources

Vinamilk's ERP system supports managers in accurately assessing thework efficiency that each employee brings ERP analyzes the collecteddata to propose plans and directions to solve difficulties for businesses

- Optimizing the payment process

As soon as the deadline comes, the payment to the supplier or partner will

be done automatically by the system

- Provide general reports to managers and leaders

Managers and leaders can easily capture the overview anytime,

anywhere From there, they make the most accurate decisions to optimizethe workflow

- Simplify many operations

Vinamilk is supplying the domestic and international markets with about

200 different product lines They put a lot of pressure on control andstatistics ERP's ability to automate and simplify operations is considered

a preeminent solution to help the company overcome all difficulties andsignificantly increase productivity and revenue

4) Explain the business processes (Functions) in detail

4.1) ERP project description

The ERP project of Vinamilk was started from 15th of March 2005 to 1st ofJanuary 2007 and total investment was 3.6 million US dollar includinghardware upgrade, software and other costs The success criteria used was goodsystem quality, information quality and impact on individual employees, thesingle department that Oracle is implementing and the whole company Figure 1illustrates the implementation success measurement applied to Vinamilk

For implementing the Oracle EBS system, there were three companies thatcooperated with Vinamilk: the ERP implementer – Pythis, the ERP vendor –Oracle, and the sole advisory firm – KPMG After considering a number of

different ERP packages, Vinamilk chose to implement the following mainapplications of Oracle E-Business Suite:

Financial and accounting management

Business intelligence (BI): analytic and reporting capabilities

4.2) Describe the applications, systems, and processes of each business:a) Warehouse management, factory, accounting, goods, production:ERP system by oracle

To effectively manage the buying and selling process at both input and outputVinamilk uses the ERP EBS 11i overall business management solution, put intouse and connected at 13 locations, including headquarters and factories ,Vinamilk's warehouses nationwide The ERP system is designed in the form ofmodules The main functional modules are divided suitable for specializedbusiness activities such as finance and accounting, manufacturing

and distribution

In the ERP market, Oracle E-Business Suite is known as one of the leading ERPsolutions in the world This suite of business administration applications allowsefficient management and automation of all business areas: financial

accounting, trade in services, manufacturing, supplies, materials and goods.b) Human resource management and salary management: Histaffapplication

With over 10 branches and affiliated factories from Hanoi, Bac Ninh to BinhDinh, Da Nang, Can Tho…Vinamilk is the largest dairy producer and

distributor in Vietnam, so the deployed version of HiStaff will provide manyspecific features such as: meet centralized data management; monitor changes

in regular personnel changes of units and branches spread across the country;apply system flexible timekeeping machine such as: assigning work shifts,monitoring time in, out, leaving early, working overtime, overtime, overtime ;apply welfare policies for production objects: occupational safety, occupationalaccident insurance, provision of labor protective equipment, periodical healthcheck, Support policies on income of workers such as: product contract, lineproductivity, daily performance, salary calculation according to revenue (KPI),monthly salary fund allocation, monthly performance salary

HiStaff has affirmed its leading position in problem solving Human resourcemanagement for medium and large scale manufacturing enterprises

c) Sales Management: Microsoft Dynamics SL Solomon App

Microsoft Dynamics SL is one of the planning software products Microsoftenterprise resources for small business and project-oriented judgment It isincluded in the Microsoft Dynamics package.

Microsoft Dynamics SL is known for its strong ERP system with connectivity

to Microsoft Office Project Server, a software in the Microsoft Office package.This comprehensive business management solution provides project-drivenbusiness services and delivers project management and project accountingfunctions to help organizations effectively manage projects, improve

profitability and efficiency Those functions include finance, project accounting,manufacturing, field services, supply chain management, analytics, ande-commerce

Distributors using the Solomon solution (renamed Microsoft Dynamics SL) tocommunicate with Vinamilk This system ensures information is savedsmoothly and timely transfer between Vinamilk and distributors Sales staffcustomers use desktop computers to input data, then synchronize the data intothe IT system of Vinamilk

- Business Intelligent:

BI is the process and Technology that businesses use to control the volume ofdata, big data, data mining A BI system (BI system) is also known as a systemDecision Support System (DSS) The core problem in the BI system is a datawarehouse (Data Warehouse) and data mining (Data Mining) because data used

in BI is aggregated data, which is the characteristic of a data warehouse At thesame time, the analysis data in BI is not simple analysis (query, Filtering) butData Mining techniques for classification, clustering, or prediction So BI has avery close relationship with Data Warehouse and Data mining

At Vinamilk, SAP software system is built according to SAP technologyNetWenver NetWenver has integrated information from the ERP system usingOracle EBS, along with the Solomon system used by distributors and

applications on the PDA for sales agents Three applications integrated into the

Business system by NetWenver Warehouse - BW to serve the intelligentreporting system, helping the leadership Vinamilk has accurate and onlineinformation about its business performance nationwide.

4.3) Situation of Vinamilk company after implementation of the ERPsystem

- Improving productivity of manufacturing, sales, finance,

purchasing,accounting and ordering by 20%

- Reducing work in process by 40%

- Operational reports were processed much faster After implementing theOracle EBS system, monthly statement preparation was reduced from 30days to 3 days

- Real-time management and data accuracy were realized

- Improving gross margin by 10% of total sales

- IT staff obtained a lot of knowledge and experience

- In accounting, the system helped to minimize risks With obviousdecentralization, operations in accounting and finance were moresmoothly than previously

- IT infrastructure was synchronized, standardized and strengthened.4.4) Some limitations:

- Lack of human resources: When implementing ERP, human resourcesoccupy the leading position Not only Vinamilk, but almost all enterpriseswhen implementing ERP have difficulties in human resources Especially,Human Resources lacks ERP expertise Therefore, most businesses have

to send employees to train and train

- Large investment costs: Although Vinamilk is a leading large enterprise

in Vietnam, ERP is still an expensive system for businesses, Vinamilk hasspent a large amount of money on this investment

IV) Introduction to Vinamilk’s procurement process in general

1)What is business process (BP)?

2) A generic business process

A generic procurement process involves four main steps: requisitioncreation, purchase order creation, materials receiving and payment.Properly managing each step of the procurement process is essential fororganizations to obtain the necessary materials or services in a timelymanner, while adhering to relevant policies, regulations, and bestpractices

a) Requisition

The procurement process starts with the ordering party creating arequisition This typically involves identifying the need for materials orservices, and creating a formal request that includes details such as thedescription, quantity, specifications, and budget codes or cost centers Therequisition is then submitted for approval by the appropriate authority.This step is generally conducted by the warehouse

b) Purchase Order

Once the requisition is approved, it is converted into a purchase order and

is sent to the vendor The purchase order is a legally binding documentthat formalizes the agreement between the ordering party and the vendor

It includes details such as the itemized list of materials or services,agreed-upon prices, delivery or performance dates, payment terms, andany applicable terms and conditions This step is generally conducted bythe purchase department

c) Receive Materials

After confirming the purchase order and having the materials or servicesready, the vendor ships the materials Then the ordering party receives thematerials from the vendor and inspects them to ensure that they meet thespecifications and quantities as stated in the purchase order Anydiscrepancies or issues are reported to the vendor for resolution, andproper documentation is maintained for record-keeping purposes Thisstep is generally conducted by the warehouse.

c) Payment to Vendor

The vendor sends an invoice to the ordering party for payment In casethe vendors are the farmers who produce the raw materials used in thosegoods or services, the invoice will be created by the ordering party Oncethe invoice is verified, the ordering party processes the payment to thevendor according to the agreed-upon payment terms This may involveinitiating a payment through the organization's accounting or financedepartment, following established payment procedures, and reconcilingthe payment with the invoice This step is generally conducted by theaccounting department

3) The Importance of business processes

- Procurement management ensures that all items and services are properlyacquired so that projects and processes can proceed efficiently andsuccessfully

- Procurement can be leveraged as a competitive advantage when

optimized to save money, time, and resources But driving down costs byavoiding delays and errors and maximizing resources is just part of thereason procurement management plays a vital role in a company’s bottomline

- Procurement management can be responsible for negotiating lucrativeproduction and supplier contracts, spearheading innovative new

processes, and playing an important part in taking a domestic businessoperation global

- Procurement management can also be important in spearheadingcorporate social responsibility in diversity and inclusion by proactivelyseeking diverse suppliers

- In the private sector, procurement is viewed as a strategic functionworking to improve the organization's profitability: Helping to streamlineprocesses, reducing raw material prices and costs, and identifying bettersources of supply

In the public sector, the concept of a 'bottom line' is less well defined there are no shareholders' dividends to be paid out or publicly declaredprofit (or loss) announcements There is however a need to maximize theoutput, in terms of teaching within the available funds We are the sector'sshareholders as taxpayers, students, and/or staff Therefore, places aninherent requirement that the funds provided are managed in a mannerthat is accountable and demonstrates both probity and value for money.4) Benefits of using business process

-Cost savings: Procurement process helps in identifying the best prices and reducingcosts for goods and services By purchasing in bulk and negotiating prices withsuppliers, the organization can lower its costs and increase profitability

Improved quality: Through the procurement process, organizations can selectsuppliers who provide high-quality goods and services, ensuring that the organizationreceives products that meet its standards and requirements

Risk management: Procurement process helps in identifying and managing risksassociated with the purchase of goods and services By assessing suppliers' financialstability, production capacity, and reputation, the organization can avoid potential risksand ensure a smooth supply chain