Supply chain management analyze ajinomoto vietnam’s supply chain management

So is there anything special in AJINOMOTO's supply chain operations that has helped the group spread its products internationally, making them indispensable items in some countries?. Sup

THE STATE BANK OF VIETNAM MINISTRY OF EDUCATION & TRAINING ®

HO CHI MINH UNIVERSITY OF BANKING

dO 0 OU

SUPPLY CHAIN MANAGEMENT

ANALYZE AJINOMOTO VIETNAM’S SUPPLY CHAIN

TASK ASSIGNMENT

Team leader: Tran Nhu Quynh

OPENING STATEMENT

PART 1: THEORETICAL BASIS

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PART 3: THE SUPPLY CHAIN OF AJINOMOTO VIETNAM'S MSG PRODUCT

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OPENING STATEMENT

To be able to create flavor from delicious and unique dishes, it is impossible to deny the importance of cooking spices such as MSG (MSG), seasoning, that create unique appeal for each dish Spices play a huge part in creating a delicious, complete dish Back in the past centuries, cooking became simpler, mainly using only salt as the main spice, but today people's

needs are getting higher and higher, and many new spices appear, with more brand diversity

Especially with the appearance of MSG (MSG) has enhanced the taste experience for users, it is a convenient spice to add flavor to each dish

However, to get a complete package of spices, specifically MSG, to reach consumers, it is necessary to go through a long process with a series of different, complex activities intertwined with each other but they are closely linked together In the food industry, to be able to stand firm

in addition to producing quality products, there must be a well-functioning operating process and supply chain that ensures smooth operation at every stage Therefore, many companies and

businesses have encountered difficulties and failures, but tn addition, thanks to the good operation

of this supply chain, many companies have had great success, one can mention the giant Group AJINOMOTO 1s a clear example

This group has created many diverse products from special raw materials, operating in 35 countries In Vietnam, a product line that has expanded the name of the AJINOMOTO brand is Ajmomoto MSG, also known as MSG So is there anything special in AJINOMOTO's supply chain operations that has helped the group spread its products internationally, making them

indispensable items in some countries? Let's learn about this issue through an essay with the

topic: "Supply chain model of AJINOMOTO Group"

PART 1: THEORETICAL BASIS

1.1 Supply Chain Definition

There are various concepts of the supply chain:

- "The supply chain is the connection of companies to bring products or services to the market." — Fundamentals of Logistics Management by Douglas M Lambert, James R Stock, and Lisa M Ellram

- "The supply chain includes every stage directly or indirectly related to meeting customer needs It involves not only manufacturers and suppliers but also transportation, warehouses, retailers, and customers." — Supply Chain Management: Strategy, Planning, and Operation by Chopra Sunil and Peter Meindl

- "The supply chain 1s a network of production and distribution choices to perform functions such as raw material procurement, converting raw materials into finished products, and distributing them to customers." — An Introduction to Supply Chain Management by Ganesham, Ran, and Terry P Harrison

1.2 Definition of Supply Chain Management

The term supply chain management can be interpreted In various ways, but it can be understood In a simplified manner as:

- "Supply chain management is the coordination of production, inventory, location, and transportation among the members of the supply chain to meet market demands smoothly and efficiently."

Alternatively, according to the definition by Mentzer De Witt, Keebler, Min, Nix, Smith, and Zacharia, the definition of supply chain management 1s:

- "Supply chain management is the strategic and systematic coordination of traditional

business functions and tactics across a company, with the aim of improving the long-term

business outcomes of individual companies as well as the entire supply chain."

To effectively manage the supply chain, attention must be paid to the following issues: + Alignment with the company's business strategy

+ Integration with customer demands

+ Alignment with the company's position

+ Adaptation to changes

1.3 Roles of Supply Chain Management

- The supply cham plays a crucial role in various industries such as manufacturing, commerce, and construction, especially in today's economic landscape where market competition 1s intensifying, and pricing, both for selling and purchasing, is becoming more tightly managed

- “Supply chain management significantly influences the expansion capabilities of

businesses, their market dominance, and customer trust Effectively managing the supply chain

not only enables companies to achieve high profits but also positions them ahead of competitors 1n the industry."

- In an increasingly competitive market, one of the decisive factors impacting market dominance and customer trust is Supply Chain Management With efficient and effective supply chain operations, a business can not only attain high profits but can also surpass competitors and foster sustainable growth Globally, efficient supply chains have contributed to major corporations like Apple, Samsung, Coca-Cola achieving profits over 40% higher than their competitors

- A well-operated supply chain brings specific benefits to a business:

+ First and foremost, 1t generates substantial profits for the business

+ Second, it enhances and improves customer service Customers are a significant source

of revenue, prompting many businesses to focus on elevating the quality of their supply chain services

+ Third, efficient supply chain operations help reduce operational costs within the business Specifically, the supply chain has the capability to cut procurement costs based on the

principle of reducing time and personnel for inventory checks and location rental costs When

your business has a professional and reliable supply chain provider, concerns about inventory backlog and production material sourcing are alleviated, leading to substantial cost reductions in other related areas

+ Finally, it ensures control and reduction of costs for the business

PART 2: OVERVIEW OF AJINOMOTO VIETNAM AND AJINOMOTO VIETNAM’S MSG PRODUCT

2.1 Overview of global Ajinomoto

Ajmomoto MSG was born more than 100 years ago from the desire to improve nutrition for the Japanese people This is the first MSG product in the world and the only MSG product 1n the

Vietnamese market originating from Japan To this day, Ajinomoto MSG is still known as a versatile spice at an affordable price Most consumers from all walks of life can easily access it, providing delicious meals, contributing to improving the quality of life From the raw material

stage to the final product, quality indicators are always strictly controlled by Ajinomoto Vietnam company according to strict standards to ensure that Ajinomoto MSG reaches consumers with quality products best quality Ajinomoto MSG is produced from natural ingredients such as sugar cane and tapioca (tapioca starch)

Currently, Ajinomoto MSG is present in over 130 countries and territories, bringing

delicious meals and contributing to improving the quality of life for people around the world Ajmomoto MSG brand ts a very strong brand in the MSG industry and it is difficult for any brand

to replace this leading position Ajinomoto MSG holds the leading position in all three factors:

quality, price, and brand image

2.2 Introduction of Ajinomoto Vietnam Company

2.2.1 General information

Ajinomoto Vietnam was established in 1991 as a 100% foreign-invested company

belonging to Ajinomoto Group, Japan with an initial investment value of more than 8 million USD, with a headquarters and also a manufacturing factory The first export was located in Bien Hoa I Industrial Park, Dong Nai After more than 30 years of operation, the company has continuously expanded its business network and improved product production capacity Currently, Ajinomoto Vietnam Company has two office headquarters in Ho Chi Minh City and Hanoi, two manufacturing factories including Ajinomoto Bien Hoa Factory in operation since

1991 and Ajinomoto Long Thanh Factory in operation since 2008 In addition, the company has 3

large distribution centers in the provinces of Long Thanh, Hai Duong, Da Nang along with 66

business branches and nearly 298 sales teams across the country The total number of employees working at Ajinomoto Vietnam Company is up to more than 2,300 people

From the first product, Ajinomoto Monosodium Glutamate, after more than 30 years, Ajmomoto Vietnam has always made efforts in research and development to bring a variety of spice, food, beverage and nutritional products Currently, Ajinomoto Vietnam has more than 35 types of food products widely introduced nationwide with brands trusted by many consumers such as: Ajinomoto MSG, Aji-ngon seasoning, Ready-to-season spices Aji-Quick, Aji-mayo Mayonnaise, Fuji Soy Sauce, Ready-to-drink donut powder, Blendy instant drink,

- Vision: To become a global food corporation with unique characteristics driven by advanced bioscience and leading chemical technologies

- Mission: "We contribute to the further development of Vietnam, contributing to bringing

happiness and health to people in Vietnam through culinary culture and food source

development."

=> With this vision and mission, Ajinomoto Vietnam Company always strives to bring a variety of food and spice products with the best quality, safety, and suitability to Vietnamese people's taste With the development trend of today's modern society, the products researched and developed by Ajinomoto Vietnam always aim at two great values: contributing to delicious meals and convenient cooking, thereby creating family cohesion and happiness and contributing good nutritional value to health

- Path: Creating new values (Create), Pioneering spirit (Pioneer), Social contribution (Contribute), Respecting human values (Prespect)

- Policy: Beliefs and conduct should be adhered to by each Ajinomoto Group company and

each employee working here

Eat Well, Live Well

which is the creation of common values - referred to as "ASV" (Ajinomoto Group Creating

Shared Value) through its own production and business activities company's business This not only creates economic value to promote sustainable development of businesses, but also creates social value, contributing to improving the happiness and health of people in Vietnam The three contents of Ajinomoto Vietnam's shared value creation activities are:

1 Efficient use of energy and natural resources

2 Support the development of food sources in the agricultural sector

3 Contribute to improving health nutrition

2.2.2 Scale and position in the market

Currently, Ajinomoto Vietnam Company has 3 large distribution centers in Long Thanh,

Hai Duong, Da Nang provinces along with 60 business branches and nearly 290 sales teams

nationwide Therefore, Ajinomoto company has organized a large-scale product distribution network throughout the country With two direct channels and one-level distribution, Ajinomoto Vietnam has made it easy for shoppers to buy its Ajinomoto MSG Research shows that customers often say “You can conveniently find Ajinomoto MSG in various locations such as markets, stores, supermarkets " There are two common forms of distribution:

Firstly, organizing mobile sales teams Operational areas are assigned to sales teams, under the direction of area supervisors These groups sell to retailers, grocery stores, wholesalers,

as well as individuals and households in various markets and residential areas The mobile sales team 1s the company's main means of distribution This method allows the product to be

distributed almost directly to the end user, bypassing intermediaries, thus representing a form of

direct channel distribution

Secondly, selling by order directly at the company When needing MSG as a gift, promotion or to serve their activities, large customers such as restaurants, hotels, and food processing companies that need to buy MSG in large quantities often choose to buy from MSG company's sales department These customers come in small quantities but often buy large quantities at a time such as supermarkets and large stores, which are included in this category This strategy expands the distribution system, increasing the ability of consumers to buy its MSG products

2.2.3 Product line

- Ajinomoto MSG: AJI-NO-MOTO MSG was born more than 100 years ago from the desire

to improve nutrition for the Japanese people This is the first MSG product in the world

and the only MSG product in the Vietnamese market originating from Japan AJI-NO-

MOTO® MSG is produced from natural ingredients such as sugar cane and tapioca (tapioca starch)

- Ayji-ngon pork MSG 1s the pioneer MSG on the market today using stewed meat bone

extract produced directly at the Ajinomoto factory using modern Japanese technology To get the best stewed meat bone extract for the production of Aji-ngon Pork Seasoning, Ajmomoto Vietnam Company selects bone, marrow, and meat ingredients provided by

reputable domestic food companies

- Ayji-Quick Hot Pot Seasoning: On occasions of gathering with relatives or meeting friends every weekend, Hot Pot is always the top choice dish of participating members With Ayji- Quick Hot Pot Seasoning Quick, today's housewife will no longer have to worry every time she wants to show off her skills in the kitchen to treat friends or family to this

delicious dish when she has Aji-Quick Thai Hot Pot seasoning and seasoning seasoning

Aji-Quick KimChi Hot Pot available

- Aji-Quick Fried Dough Seasoning: Ajinomoto Vietnam Company's Ayji-Quick Fried

Dough Seasoning line includes 2 products: Aji-Quick Pre-Seasoned Seasoning Dried

Crispy Fried Dough and Aji-Quick Pre-Seasoned Dough Fried Seasoning Crispy With Aji-Quick Pre-Seasoned Fried Dough Seasoning, consumers will not waste much time

preparing delicious dishes Especially with pre-seasoned seasoning, Aji-Quick Fried

Powder can also be used to fry chicken, meat or shrimp and many other foods, making family meals ncher and rich in nutrients

2.3 Introduction to Ajinomoto MSG Products

Ajmomoto MSG was born more than 100 years ago from the desire to improve nutrition for the Japanese people This is the first MSG product in the world and the only MSG product 1n the

Vietnamese market originating from Japan To this day, Ajinomoto MSG is still known as a versatile spice at an affordable price Most consumers from all walks of life can easily access it, providing delicious meals, contributing to improving the quality of life From the raw material

stage to the final product, quality indicators are always strictly controlled by Ajinomoto Vietnam

company according to strict standards to ensure that Ajinomoto MSG reaches consumers with

quality products best quality

Ajmomoto MSG 1s produced from natural ingredients such as sugar cane and tapioca (cassava)

Currently, Ajinomoto MSG is present in over 130 countries and territories, bringing

delicious meals and contributing to improving the quality of life for people around the world

2.4, Market situation

According to data from Ajinomoto, Ajinomoto MSG currently holds approximately 60% of

the MSG market share in Vietnam Consequently, MSG is the primary driving force behind

Ajmomoto Vietnam's substantial annual revenue and profit

At present, the Ajinomoto MSG brand is a dominant force in the MSG industry, with few brands capable of replacing its leading position Ajinomoto MSG excels in all three aspects:

quality, pricing, and brand image

Despite ongoing debates about the health implications of MSG, Ajinomoto continues to research and improve its products to meet customer demands and ensure safety for users In

Vietnam and many countries worldwide, Ajinomoto MSG remains a widely used product in cooking

Ajmomoto's target customer group comprises homemakers, especially women who dedicate significant time to cooking for their families The company aims to provide convenient and quick solutions for these individuals to create delicious and flavorful meals for their families

2.5 Import and Export situation

The export-import situation of Ajinomoto MSG in Vietnam has shown an increasing trend

In recent years Concerning exports, Ajinomoto operates manufacturing plants for seasoning powder in various countries such as Japan, Thailand, India, China, etc In 2021, the export of Ajmomoto MSG to Southeast Asian markets demonstrated a growing trend

Regarding the import process, Ajinomoto also imports raw materials from various countries

worldwide to produce its products Specifically, some crucial ingredients for Ajinomoto MSG production are imported from China, Indonesia, and Thailand

Ajmomoto MSG ts widely used in the food industry to enhance flavor and provide a better culinary experience for consumers With the diversification of products and the expansion of

export markets to new countries, the future market outlook for Ajinomoto seasoning powder is

positive, promising significant potential and potential growth in the coming years

PART 3: THE SUPPLY CHAIN OF AJINOMOTO VIETNAM'S MSG PRODUCT

Receiving Shipping Shipping

Shipping

Figure 3.1: Suppy Chain Diagram of Ajinomoto (Source: The Ajinomoto Company) Within Ajinomoto's supply chain, suppliers are pivotal contributors, furnishing essential raw materials and resources for the production of top-notch MSG This encompasses ingredients, equipment, technology, production ingredients, packaging, and transportation

The manufacturer holds a crucial position in Ajinomoto's supply chain, overseeing the execution of the MSG production process from raw materials to finished products This involves MSG production, quality control, research and development, ensuring the highest standards are maintained

Distributors, retailers, and customers collectively perform vital roles in facilitating the transition of products from manufacturers to end consumers within Ajinomoto's supply chain

3.1 Supplier

Ajmomoto MSG 1s produced from natural ingredients, namely sugarcane and tapioca (tapioca starch), and undergoes thorough testing to ensure the highest quality for the manufacturing process From the raw material stage to the final product, quality standards are meticulously controlled according to stringent criteria to ensure that Ajinomoto MSG delivered to consumers 1s of the highest quality

3.1.1 Sugarcane source

- The raw materials, meeting the traceability standards of the Ajinomoto Quality Assurance System (ASQUA), are sourced from sugarcane farms or individual farmers cultivating sugarcane: + Thanh Long Sugarcane Farm (Chau Thanh District, Tay Ninh), under the TTC Group, covers an area of 960 hectares of sugarcane, divided into approximately 10 sections

+ Additionally, sugarcane is sourced from individual farmers and cooperatives cultivating

sugarcane in the Mekong Delta, Phu Yen, Tay Ninh, and Long An

3.1.2 Tapioca starch source

Tapioca starch procured from other manufacturing plants is always thoroughly inspected to ensure the highest quality for both the production process and the final product

3.1.3 Packaging

Vinpack Group supplies carton boxes and packaging materials for AJINOMOTO Vietnam

3.1.4 Supplier selection criteria

For Ajinomoto Vietnam, the process of selecting suppliers involves meticulous consideration of key criteria to ensure the production of high-quality products The company prioritizes the following criteria in the supplier selection process:

Quality Standards:

- Adhering to the Standard for Quality Control of Ingredients (ASQUA)

- Suppliers must meet specific quality benchmarks to ensure the consistency and safety of the raw materials

Price:

Cost is a crucial factor affecting your company's profitability, so when choosing a supplier,

prioritize the best offer rather than simply opting for the lowest price Consider the supplier's pricing in comparison to others and evaluate whether it might be more beneficial to explore

substitute options Additionally, assess the supplier's commitment to maintaining stable pricing

over the long term and their transparency in communicating any price changes in advance

Compliance with Regulations:

Suppliers are required to comply with regulations related to the production, sourcing, and

transportation of materials This includes adherence to food safety regulations, environmental

standards, and other legal requirements

Being Trustworthy:

Suppliers must demonstrate a track record of delivering materials on time and in the agreed- upon quantities

Technology and Innovation:

Suppliers are encouraged to adopt advanced technologies and mnovative practices that contribute to the improvement of production processes, quality, and environmental sustainability Environmental Responsibility:

Ajmomoto Vietnam places importance on sustainable and environmentally finendly

practices Suppliers are evaluated based on their commitment to eco-fnendly measures, waste reduction initiatives, and responsible sourcing

Social Responsibility:

Suppliers are expected to adhere to social responsibility standards, including fair labor practices, human rights, and ethical conduct This includes ensuring the absence of child labor and forced labor in their operations

Innovation Capability:

Suppliers are encouraged to have the capability for ongoing innovation, allowing them to adapt to changing market demands and contribute to the improvement of Ajinomoto's products 3.1.5 The purchasing process

« Identifying the Company's Needs:

Ajmomoto Vietnam forecasts its raw material requirements through various departments

such as production and management

« Supplier Identification:

The procurement department searches and evaluates potential suppliers based on criteria like quality, price, reliability, and supply capabilities

« Request for Quotation (RFQ) and Quotation Submission:

The procurement department sends an RFQ to selected suppliers, detailing required products or services and any specific conditions Suppliers respond with quotations, covering

pricing, payment terms, delivery times, and other relevant details

¢ Place Order:

At this stage, the company plans orders based on agreements with suppliers regarding

quantity, price, delivery time, and location

« Payment and Invoicing:

Payment terms are agreed upon, and the supplier submits an official invoice for the provided products or services

¢ Delivery, Inspection, and Supplier Performance Evaluation:

Products or services are delivered, and the procurement department may conduct Inspections to ensure they meet specified standards and quantities A performance evaluation of the supplier may be conducted to enhance the procurement process and maintain effective relationships