Topic- Overview Vinamilk's Milk Supply Chain And Risk Management In Vinamilk’s Supply Chain.pdf

Business sectors: The company has its main business in processing, production, trade, import and export of dairy products and other nutritious ones.. Main products: powdered milk, fresh

DANANG UNIVERSITY DANANG UNIVERSITY OF ECONOMICS

University of Economics

SUBJECT: SUPPLY CHAIN MANAGEMENT

TOPIC: OVERVIEW VINAMILK'S MILK SUPPLY

CHAIN AND RISK MANAGEMENT IN VINAMILK’S

TABLE OF CONTENT

809015 1A Sẽ 2

| INTRODUCTION retiree 2 1 Overview, business sectors and main products: 2

2 Vision, mission, core value, business philosophy: 3

3 History of establishment and developmertt: 3

II OVERVIEW VINAMILK'S MACRO ENVIRONMENT 5

1 Political environmennf - nh nn nén nh Hành hs Ho Hee te 5 2 ECONOMIC environmennf cán nh nh» he Hoa 5 3 Cultural and social environmernf ch nh he 6 4 Technology environme€hnf c nh nhn nho re 6 5 Natural environmenf cánh chen nh kho 6 6 Demographic ENvirONMENt eee 7 Ill VINAMILK SUPPLY CHAIN MODEL c che 7 1 INPUT SUPPLY STAGE ieee 7 2 Production and proceSSỈndQ cá erie 8 3 DistriDỤOn cá nh» Tnhh Kế HE kh 10 IV STATUS OF RISKS IN VINAMILK“S SUPPLY CHAIN 13

2 Risk in Vinamilk's production cho 14

V Assess the current status of risk management in Vinamilk's

1 POSItiV€ DỌTẨS Enterta 15

2 NegatiVe DỌPẨS erin 16

7, Ho Chi Minh City

involved in a diverse range of dairy products, including milk and yogurt It holds a significant share, estimated at approximately 50%,

of Vietnam's dairy market.The company was founded in 1976 and went public on the Hochiminh Stock Exchange in 2006

1.2 Business sectors:

The company has its main business in processing, production, trade, import and export of dairy products and other nutritious ones 1.3 Main products:

powdered milk, fresh milk, soya milk, yogurts, ice-cream, cheese, fruit juice, coffee and other products derived from milk

2 Vision, mission, core value, business philosophy:

2.1 Vision:

nutrition and health products serving human life.”

2.2 Mission:

“Vinamilk is committed to providing the community with top quality and high-quality nutrition with its own respect, love and high responsibility for human life and society.”

2.3 Core value:

nutrition and health products serving human life”

2.4 Business Philosophy:

“Vinamilk desires to become one of the most favorite brands in every region and territory Therefore, we keep in our mind and our heart that quality and innovation are always our most important

commit to respond to all their needs.”

3 History of establishment and development:

development of more than 40 years with constant change and effort Despite appearing in the Vietnamese market for a long time, until now, Vinamilk's position in the domestic dairy industry has not

changed even though in recent years, numerous foreign milk brands have entered the Vietnamese market

During the morethan40year period of operation, Vinamilk Dairy Company has gone through a lot of different stages of development Each stage has marked innovative progress of the business, with the stability of a big brand with a long history

3.1 Vinamilk's formation period from 1976 to 1986:

(Vinamilk) was officially established with the original name Southern

Milk and Coffee Company Company belonged to the General Department of Food Industry in the South

transferred to the Ministry ofQ Food Industry and was renamed Milk Coffee Confectionery Enterprise I

3.2 The “Đổi mới” period during 1986 - 2003:

under the Ministry of Light Industry The company specializes in the production and processing of dairy products

By 1994, Vietnam Dairy Products Company built a factory in Hanoi - helping the North facilitate trading

Company to establish Binh Dinh Dairy Joint Venture Enterprise This joint venture helped the company succeed in entering the Central market in the most convenient way

In May 2001, the company launched the Can Tho Dairy factory 3.3 The equitization period from 2003 to present:

In November 2003, the company was transformed into the Vietnam Dairy Joint Stock Company The company's trading code on the Vietnam stock exchange is: VNM Also in 2003, the Company launched brand new dairy factories in Binh Dinh and Ho Chi Minh City

In 2004, the Company acquired shares of Saigon Dairy Joint Stock Company, increasing its capital charter to 1,590 billion VND

By 2005, the Company continued to purchase shares of joint venture

partners in Binh Dinh Dairy Joint Stock Company In June 2005, the company inaugurated an additional Nghe An Dairy factory

On January 19th, 2006, the company was listed on HOSE At that time, the capital of the Investment and Trading Corporation The State holds 50.01% of the company's charter capital.Q

In 2009, the business developed 135,000 distribution agents, 9 factories and several dairy farms in Nghe An and Tuyen Quang In

2012, the company changed the brand's logo

milk factory at Binh Duong province with a total investment capital

of 220 million USD In 2011, Danang Dairy company came into operation with an investment capital of up to 30 million USD

In 2016, the first dairy factory in a foreign country was inaugurated, the Angkor Milk Dairy factory in Cambodia.Q

By 2017, Vinamilk Organic Da Lat the first organic dairy farm in Vietnam was launched

Up to now, Vinamilk owns a system of 14 factories across the country

standards, with modern technology which can produce most of the main product lines of the dairy industry This contributed to help Vinamilk maintain its leading position in key dairy industries for many years

Il OVERVIEW VINAMILK'S MACRO ENVIRONMENT

1 Political environment

strengthening and ensuring national security and defense

procedures become increasingly simple and transparent

processing time is greatly shortened

farming and processing for farmers Facilitate and provide input materials for companies in the industry

In 2022, the average income per person per month at current prices will reach about 4,673 million VND, an increase of 11.1%

purchasing power, promoting different needs and desires from

aesthetics,

The income distribution is more differentiated among the population, creating more diversity in consumer needs and desires, thereby creating many different segments in the market

consumer price index (CPI) in 2022 will increase by 3.15% compared to 2021 Most dairy product prices are stable with the inflation index remaining at a low level, creating an environment for consumers to shop more, and promoting the production process of businesses

The dairy industry is in a stage of development, the demand for milk is increasing, milk has become an essential daily product With increasingly modern technology trends, effective distribution channels, and reasonable prices, the dairy industry will continue to develop in the future

3 Cultural and social environment

The habit of using sweet products, canned products, and milk- related products is increasing Access to information sources becomes easier through newspapers, the internet, pictures, banners, etc Making people increasingly feel a high need for care and satisfaction of physical needs matter

The high rate of social development leads to an increasingly necessary need for quality but convenient nutritional products Therefore, milk becomes a quick solution but still ensures nutrients for working-age, students, and children

Honoring the national image through the brand in front of foreign product lines has a profound meaning to Vietnamese consumers

Vietnamese people's psychological habits are less likely to change their choice once they trust a certain brand

4 Technology environment

Technology is increasingly developing, creating many ways to develop products in terms of design, quality, taste, At the same time, it has a strong impact on advertising and the level

of product information to people consumption

Vietnam is gradually integrating with the world, scientific and technological achievements are continuously transferred and

production

5 Natural environment

Vietnam has a number of regions with temperate climates such as Sapa, Lao Cai province, Da Lat, Lam Dong Province or continental climates such as Lai Chau, Son La, suitable for growing high-quality grass

Despite the hot and humid climate, our country's natural conditions are quite suitable for the development of the dairy industry such as Tuyen Quang, Lam Dong, Ba Vi, Nghe An, Son

La,

6 Demographic environment

Vietnamese people's bodies are quite short compared to the world, so milk has become an extremely necessary product to improve weight and height

The birth rate is high and the demand for milk is also

increasing to ensure nutrition for children

Vietnam's population will age rapidly because currently, the number of people of working age accounts for 2/3 of the

population

III VINAMILK SUPPLY CHAIN MODEL

1 Input supply stage

Vinamilk gets its inputs from two major sources: purchasing dairy breeds for local farming and purchasing milk powder for the processing stage

e Regarding fresh milk raw material areas: To serve the

company owns 12 dairy farms, cooperates, and signs contracts directly with nearly 6,000 dairy farming households, managing nearly 130,000 cows with an average raw milk output of 950 tons - 1,000 tons/year day All Vinamilk fresh milk products are produced from 100% raw fresh milk, ensuring compliance

December 29, 2017, on National Technical Regulations for raw fresh milk products issued by the Minister of Agriculture and Rural Development

can be imported through intermediaries or imported directly and then transported to the production factory Some suppliers

of imported milk ingredients for Vinamilk company include:

corporation in the field of milk and export of dairy products, this group holds 1/3 of the world's trading volume

+ Hoogwegt International is a major partner specializing

in providing milk powder to manufacturers and consumers in Europe in particular and around the world in general as well as Vinamilk company

+ In addition, Perstima Binh Duong Vietnam, along with many other domestic companies, has also been a strategic supplier for Vinamilk for more than 10 years

Fonterra (SEA) Pte Ltd Raw milk powder

Since 2006, to have enough cow's milk sources to serve the milk production process, Vinamilk has invested in dairy farming, replicating dairy farms according to international standards to ensure the source of raw materials for milk production has the best quality

Cows that meet health standards will be milked The milking process can be done by hand or by machine At livestock farms, raw cow milk after being milked is always quickly brought to the cold storage system within one hour Then, to evaluate milk quality, Vinamilk applies an assessment based on three main criteria: the ratio of dry matter, fat, and microorganisms Particularly milk with antibiotic residues, will not be purchased to protect consumers’ health

22.Receive and check raw materials for milk

production

Fresh milk from dairy farmers after milking is quickly brought to raw

fresh milk transfer stations (transfer stations) At the transfer

station, the factory's product quality inspection staff will conduct tests to analyze precipitation (with standard 750 alcohol), taste, smell, and microbiological criteria (monitored by color loss time) methylene blue), lactic fermentation (to detect antibiotic residues)

These tests are performed regularly every morning and afternoon milk collection Milk that meets the requirements will be sampled and put into a cold storage tank at the transfer station Milk samples are coded with symbols and sealed before being transferred to the

percentage, protein level, and sugar level (to detect cases of adulteration) sugar into milk), freezing point (to detect cases where households mix water into milk) Sample testing at the transfer station and sampling sent to the factory is conducted in the presence of milk delivery households

2.3 Storage by cold storage

Fresh milk, after being checked for quality and passed through measuring and filtering equipment, will be entered into the cold tank system (150 m3/tank) From the cold tank, raw fresh milk will go

pasteurization, cooling to 4 degrees Celsius and transferred to the

tank ready for processing Centrifuge separates bacteria, helps eliminate harmful bacteria and microbial spores

2.4 UHT sterilization processing

After being transferred to the cold storage tank, Vinamilk is ready for UHT sterilization processing The advanced sterilization system heats milk up to 140 degrees Celsius by pumping milk into plate heat exchangers After heating, the milk will be centrifuged for cleaning Milk residue as well as dead microorganisms will be

centrifugation will be qualified to be transferred to other processing

temperature below 8 degrees Celsius After that, the milk will be standardized and the content of substances adjusted to ensure that after completion, the milk will meet the standards as announced on the packaging

Finally, the milk is also pasteurized to remove microorganisms

as well as spores or enzymes in the milk to prolong the milk's storage time at room temperature and limit changes in properties 2.5 Packaging products

After the milk has been sterilized, the final step is to the milk packaging line into boxes and bags for distribution to the market To make the shipping process simpler and faster Milk will be arranged and packaged into large cartons in certain quantities Quality cartons also help preserve milk from impact and collision during transportation

Initially, the roll paper is put through the coding machine, before being packaged, it must be sterilized with 35% H2O2 at 70 degrees Celsius and a high-frequency ultraviolet system within 4 seconds Then the machine automatically pours the product After pouring, the machine automatically sticks the straw and follows the conveyor belt to the packaging area

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