group 2 vinamilk supply chain analyst

It is looking into entering the global market and has consequently invested in properties Vinamilk’s products 1 Fresh milk and nutritious milk 7 Condensed milk 2 Product for pregnant

University Of Transport Ho Chi Minh City

Assignment Cover Sheet

for submission of individual and group work

QL23IECE –

Introduction to Logistics and Supply Chain

DANG THUY LONG CHAU Declaration and statement of authorship:

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I INTRODUCTION _ 4 II FINDING 6

1 Global Supply Chain Of Vinamilk _ 6 1.1.Input supply activity _ 7

1.2.Production and processing activity 7

1.3.Distribution and consumption activity _ 7

2 Data Visualization 8 2.1.Planning 8

III REFERENCES _ 23

I INTRODUCTION

Vinamilk is a Vietnamese dairy business founded in 1976 The company has grown today to become the largest dairy company (In the dairy industry, Vinamilk has made progress on the most important rankings Specifically, this 2.8-billion-dollar brand has moved to 6th place in the “Top 10 most valuable milk brands” globally and continues to appear in the “Top 5 strongest global milk brands” with 2nd position) Vinamilk's headquarters are in Ho Chi Minh City and its products include liquid, powdered milk and other dairy products

Table: Vinamilk’s Products

After more than 45 years of establishment and development, from 3 small factories at the beginning, the company now manages more than 50 units both at home and abroad, including 15 farms and 17 factories, 13 subsidiaries, joint ventures and associates In Vietnam, the company runs a system of factories and farms at the largest scale in the domestic dairy industry The Vietnamese dairy brand is involved in all stages of production from manufacturing, marketing and distribution Besides, the company has started to offer services in the logistics and packaging sectors, healthcare, and technical support to farmers and got a foothold in the real estate industry It is looking into entering the global market and has consequently invested in properties

Vinamilk’s products

1 Fresh milk and nutritious milk 7 Condensed milk

2 Product for pregnant and

infant

8 Plant-based milk

4 Nutrition product for adults 10 Ice cream

6 Yogurt drink and juicy milk

drink

13 Juicy Milk Drink

in the USA, Poland, and New Zealand Vinamilk is present in 60 countries and territories, also the only representative of South-East Asia in “World’s top 50 dairy producers” (36th position)

Figure 1: Vinamilk Stores Around The World

Source: Vinamilk Story

Since its establishment, the brand has two types of symbols: the company logo (circle) and the brand logo (oval) that have gone through different stages of change, specifically:

Figure 2: Vinamilk Logo Through Each Period

Source: Vinamilk Logo And The Meaning Of Change After Nearly 5 Decades

On July 6th, 2023, Vinamilk launched a completely different brand identity, including a logo with a new mission, strategic vision and positioning The word "Vinamilk" is handwritten with strong handwriting, the overall logo image is quite simple but bold, and at the same time reminiscent of the brand's "always be yourself" identity

This change is not only aesthetic, but also reflects Vinamilk's continuous transformation and improvement It demonstrates the company's commitment to providing quality products and enhancing the lives of consumers This new identity set will be continuously applied across the entire Vinamilk logo system starting from July 2023, including websites, online sales channels, retail points, stores, on product packaging and every other touchpoint of the brand

Figure 3: Vinamilk Logo

Source: Vinamilk Logo And The Meaning Of Change After Nearly 5 Decades

In recent days, Vinamilk's new logo has become a "hot" topic on social networks with many "meme" photos created based on this logo More notably, Vinamilk has come up with a unique innovation by introducing a separate website, allowing users to create their own personal logo with a design similar to Vinamilk's symbol This has created a trend of "catching trends" that is causing fever on social platforms

Figure 4: A Trend Of Vinamilk

Source: Vinamilk Logo And The Meaning Of Change After Nearly 5 Decades

1 Global Supply Chain Of Vinamilk

The Vinamilk’s supply chain contains three main stages (based on the report from Vinamilk JSC Corporation Presentation)

• Input supply • Production and processing • Distribution and consumption

1.1 Input supply activity

Vinamilk gets its inputs from two major sources: purchasing dairy breeds for local farming and purchasing milk powder for the processing activity To have the highest quality of milk, Vinamilk imports dairy breeds from Australia and New Zealand, while the milk powder is transported from the USA, New Zealand and Australia The disadvantage in this supply chain lies in the dependence on imported material After having dairy breeds imported, these cattle will be supplied to local farms for husbandry Raw milk will be collected both from contracted farmers - who act as suppliers and owners of the cooperative and from Vinamilk's farms for the collection from local farmers, the raw milk is delivered by the farmers to the collection center twice per day There are system tests for their input and the payment will be made to farmers based on the quality and quantity of delivered milk Next, the raw milk is preserved at 2 to 6°C and transported to the factories

1.2 Production and processing activity

In this stage, Vinamilk would be involved in cattle farming, milking, and maintenance and act as the manufacturer In Vinamilk farms, each cow has its own chips to monitor relevant data about health status to calculate milk productivity The milking process was automatically taken and transported in cold equipment and the sample of milk will be given to the testing center to ensure its quality before processing into final products The qualified milk will be pasteurized by the UHT system, then using certain recipes to produce the fresh milk which is ready to use in other dairy products such as liquid milk, condensed milk or yogurt All these steps in production and processing activity adopt the standard by Tetra Plant Master, even for the machine, packages and labels as well as ensure the eco-friendly materials The final products will be directly sent to the inventory, which is operated by the LGV robot system to optimize the process and improve the quality Vinamilk also uses the Smart Warehouse technology to guarantee storage conditions and maintain the flavor and quality of the milk For these processing activities, Vinamilk has operated 13 modern factories with two mega-scale in Vietnam Also, there are 2 logistic companies that are run to assist the supply chain of raw materials and finished products in the warehouse

1.3 Distribution and consumption activity

The Vinamilk products which are distributed through the network of traditional trade, modern trade and key accounts will be transported through the distribution partners to the trading points Vinamilk's distribution system has a total number of retail points nationwide reaching more than 240.000 in traditional channels and 7.800 in modern channels Recently, the "Giac Mo Sua Viet" program has officially surpassed the milestone of 500 stores nationwide, covering all 63 provinces and cities Accompanied by the e-commerce website www.giacmosuaviet.com.vn which was built by Vinamilk in 2016 is also promoting efficiency of the distribution, especially during the period

of social distancing due to Covid-19 This strong distribution system is fostered thanks to the application of the ERP (Enterprise Resource Planning) tools to facilitate the process The technology supports Vinamilk in working as both wholesaler and retailer, controlling the inventory on hand and supply amount as well as improving the sale activities Vinamilk is going to accelerate its distribution points to gain more market share, especially in rural areas and small urban areas as these areas have the growth at a double-digit rate Not only satisfying the local demand, Vietnam exports dairy products to 43 nations, particularly infant milk formula

2 Data Visualization

Based on the need for the global supply chain as complexity and updated to innovative technologies to deliver products at the right time, at the right place, and in the right condition while minimizing expenses, Vinamilk has its own data system to modernize all processes through data The system helps optimize the supply chain, reducing operational costs, and ensuring efficient product delivery

2.1 Planning ERP System

Vinamilk has a specific data system called the ERP (Enterprise Resource Planning) - a tool that supports the management of business processes accurately and optimally, which integrates and automates the company processes, providing a comprehensive view of its operations and data-driven decisions In comparison to other management systems (APS, MRP, BI, ), the ERP offers more extensive data integration, encompassing various departments and processes ERP is more comprehensive, addressing financial and other non-production aspects As the information updated to January 2022, Vinamilk primarily uses ERP systems for managing business operations without other ones

Figure 5: Illustration Of Vinamilk ERP System

Source: Collected from Internet

Vinamilk’s increase in revenue and profit margins

Vinamilk’s adoption of an ERP system has resulted in an increase in revenue and profit margins The company reported a 9.5% increase in revenue in the first seven months of 2021, reaching VND 32.9 trillion (USD 1.4 billion) Furthermore, Vinamilk’s profit before tax increased by 17.3% compared to the same period in the previous year As you can see from the data below, the ERP adaptation from 2007 has brought a strong base for Vinamilk’s steady increase in revenue from 2010 to 2023 by almost 47 thousand billion VND

Figure 6: Vinamilk’s Total Revenue From 2010 To 2023

Source: Market Magazine Finance And Money (Online)

2.2 Inventory Management

Economic Order Quantity (EOQ) is an amount of items that is the most ideal to purchase at a time, resulting in cost minimization in inventory management Vinamilk is currently implementing this model to operate its inventory optimally

Vinamilk has also integrated automation and advanced technologies into their system to enhance efficiency in control

a Leverage automation

Vinamilk has constructed a leading smart warehouse in Vietnam, covering an area of 6.000 m2 The warehouse is 35 meters in height, comprising 17 floors of racks with a capacity of 27.168 cargo lots Merchandises are automatically imported and exported by 15 RGVs (Rail guided vehicles) transporting finished product pallets to the warehouse and 80 Robot Cranes (Stacker

Crane) stacking pallets on the shelf system

Figure 7: Smart Warehouse Of Vinamilk In Vietnam

Source: Tuổi trẻ Thủ Đô

b Raw materials

Vinamilk’s major components are raw fresh milk, imported powdered milk, and spices The remaining ingredients will be stored in a normal temperature environment with natural cooling and by FIFO method (First In, First Out), which means the materials that are stocked first will be used in the production process first to ensure quality of material sources Items are placed on giant shelves (4-6 floors high), distinguished by their weight

c Finished products

The completed product warehouse is split into four primary categories, depending on regional market demands: pasteurized milk, yogurt, and so on Vinamilk will hire an outsourced warehouse if the internal inventory exceeds its storage capacity

d Inventory management in the ERP model

All shelves, cells, and boxes will be labeled with codes/barcodes and position-saved in the warehouse management system (WMS) The ERP system will provide a map that gives information about the location of every product, package, item, … and it will be able to display a comprehensive inventory report in the warehouse in real-time This technology enables the production department to track the availability of items just by inputting the product’s name or

item’s code into the system, thus saving a significant amount of time As a result, they are able to actively outline in-time plans for manufacture Furthermore, utilizing the ERP system gains Vinamilk advantages in emergency circumstances since it enhances communication between factories, DCs and partners

3 Increasing Perfect Order Deliveries

Perfect order deliveries (PODs) can be seen as some critical measurements that indicate how well a company can fulfill their customers’ demand accurately on time to the right location, within the exact quantity of orders, and with order remain undamaged throughout the process of delivery while also containing the right documentation These are critical metrics that any businesses including Vinamilk must pay attention to them to gain wide range of visibility as well as economic advantage

Vinamilk had adopted technology into their systems including the RFID integration into their products Thus, the real time tracking has never been as easy as it is now Additionally, Vinamilk manage to establish an online shop, allowing them to track their customers’ orders overtime As a result, Vinamilk takes advantage in the field of visibility as well as calculating EOQs more and more accurately

On the other hand, Vinamilk is now operating their online sale platform through “Giacmosuaviet.com.vn” and “Giac mo sua Viet” retail shop They have different ways to manage their products and satisfy the various type of customers’ needs:

• Firstly, for small buyer or retailer, Vinamilk have some restriction on their orders like the size and weight limitations which indicates that the order must not exceed a maximum weight of 8 kgs and a maximum package dimension of 35 cms for all three dimensions • Secondly, for larger buyer such as shopping malls, they can contact Vinamilk directly to

negotiate By categorizing their customers’ type, Vinamilk can manage the shipment for different groups As a result, the cost of delivery is reduced, and the number of PODs is raised

4 Sustainable Supply Chain Practice

Long-term development shares a strong bond with a sustainable supply chain Vinamilk established the PESTEL management structure to ensure the effective and efficient implementation of sustainability This structure includes Political - Economical - Social - Technological - Environmental and Legal factors

4.1 Sustainability Strategies a Political factor

Vinamilk actively participates in perfecting the relevant industry legal system, pioneering in applying and updating state regulations, contributing ideas and exchanging directly/online through sharing sessions, seminars on legal documents

d Technological

"Digital transformation" is the government's direction in the course of national development and renovation Vinamilk has been applying modern technology 4.0 in all stages of farm management and operation Thanks to a comprehensive management and operation software system namely ration management, health and activity control system, maintenance software system through Delpro, afikim, DP21, Pharmadeluxe, DTMSuite, SCR software, etc the cows are always monitored and optimally cared for to ensure good health of individual cow, high yield and quality of raw milk

Figure 8 Source: Vinamilk Sustainable Development Report 2022