Subject: SCM201
Name: Tran Phuong Anh – SS150254
Class: IB1504
Contents
I. INTRODUCTION...................................................................................................................................2
1. Overview of Vietnam's dairy industry in 2020...............................................................................2
2. All about company:.........................................................................................................................3
II. ANALYSIS.............................................................................................................................................3
.................................................................................................................................................................3
1. Input supply stage:..........................................................................................................................4
Advantages of input supply................................................................................................................5
Disadvantages of input supply...........................................................................................................6
2. Production stage of Vinamilk Company:........................................................................................6
3. Output distribution of Vinamilk Company:....................................................................................8
Advantages of Vinamilk's distribution strategy:................................................................................9
Disadvantages of Vinamilk's distribution strategy:.........................................................................10
III. PROPOSING IMPROVEMENTS TO THE SUPPLY CHAIN.................................................................11
IV. CONCLUSION.................................................................................................................................11
V. REFERENCES......................................................................................................................................12
I. INTRODUCTION
The concept of formula milk was no longer foreign to Vietnamese people
about a decade ago. Most Vietnamese people today recognize formula milk as
a delicious, nutritious, and safe product, as well as a convenience; because for
a few thousand VND, any consumer can have a delicious and nutritious milk
carton.
However, getting a glass of milk to customers is more than just a single
operation or a few phases; it is a big cycle, a series of diverse, very complex
activities. There's a lot of risk in it.
In addition, the Vietnam Dairy Products Joint Stock Corporation Vinamilk
is one of the rare companies that has achieved success as a result of its
excellent manner of conducting its operation chain, or rather its supply chain.
So, what has made Vinamilk successful in the face of fierce competition
from a slew of other brands on the Vietnamese dairy market, such TH
Truemilk, Dutch Lady, Abbott, Nestle, Vinasoy, Moc Chau, and Dalat milk? This
analysis will provide more information about the supply chain in general and
Vinamilk in particular, as well as detail and comment on Vinamilk's supply
chain and supply chain analysis.
1. Overview of Vietnam's dairy industry in 2020
The Covid-19 epidemic has stifled dairy industry growth in 2020. GDP
climbed by 2.91 percent in 2020, according to the General Statistics Office,
despite being the lowest increase in the period 2011-2020, although in the
context of the Covid-19 epidemic. Vietnam has achieved enormous success,
having the greatest growth rate in the world. On the plus side, social
distancing measures helped effectively control the spread of the disease, but
they inadvertently reduced demand for local consumption when many tourist
establishments, restaurants, and schools had to close, while an increase in
home consumption was insufficient to offset the decline. In addition,
consumer demand was also affected because the whole country had 32.1
million people negatively affected by the epidemic, they faced economic
difficulties, the average income of workers decreased by 2.3%. Accordingly,
the FMCG industry recorded a decrease of 7% and the dairy industry alone
decreased by 6%.
2. All about company:
Vietnam Dairy Products Joint Stock Company (Vinamilk); stock code
HOSE: VNM, established on August 20, 1976. The company's head office is
located at 10 Tan Trao, Tan Phu Ward, District 7, Ho Chi Minh City, Vietnam.
- The company’s business functions are: Producing products under the
Vinamilk brand: milk and other dairy products.
- Areas of operation: Vietnam, Asia-Pacific, Europe, Middle East, Africa,
North America.
With excellent efforts over the years, the Company has become one of the
leading firms in Vietnam in many sectors. The company's accomplishments
have actively contributed to the country's industrialization and modernization.
Vinamilk is Vietnam's top dairy producer in terms of sales and output.
Vinamilk's product line is diverse, including: powdered milk and liquid milk as
core products; value-added items such as condensed milk, yogurt, fermented
drinks healthy for the digestive system, ice cream, and cheese. Vinamilk has
always provided the market with a varied product line, complex flavors, and
the greatest packaging options. The company has a huge distribution network
across the country and abroad, which makes it possible for the company to
reach a big number of consumers.
II. ANALYSIS
Analysis of the product supply chain of Vinamilk dairy company.
Farmer's household
Cow farm
Hộ
Milk Distributors
Raw milk processing Retailers Consumers
factory Supermarket
purchasing station
Imported material Vinamilk's supply chain model
1. Input supply stage:
Vinamilk's input supply stage includes: raw materials imported from
overseas, and the Company actively invests in establishing industrial-scale farms,
while strengthening raw material procurement and development fresh milk from
private families. This is the initial member of the Company's supply chain . Cow
farms and dairy farmers have the role of providing input milk materials for
production through milk collection stations. Milk obtained from farms must
adhere to the quality requirements agreed upon by Vinamilk Company and the
farm. Raw milk must be subjected to stringent testing if it meets the following
criteria:
- Appearance: Natural delicious, characteristic of fresh milk, without any
strange taste.
- Freshness
- Acidity
- Microbiological indicators
- Heavy metal content
- Pesticides, veterinary drugs
- Guaranteed origin (do not use milk of sick cows)
- Particularly for the production of pasteurized fresh milk, fresh milk
must strictly ensure freshness, and not be precipitated by 75-degree
alcohol.
Imported dairy materials can be imported through intermediaries or directly
imported and then transported to the factory. Currently, Vinamilk's main raw
material suppliers are the US, New Zealand, and Europe.
List of suppliers of imported dairy ingredients of Vinamilk:
Supplier's name Products supplied
Fonterra (SEA) Pte Ltd Raw Milk Powder
Hoogwegt International BV Raw milk powder
Perstima Binh Duong Steel case
Tetra Pak Indochina Paper packaging
For raw milk materials from cow farms, the purchasing process takes place as
follows:
Farmer's household Raw milk
Milk processing factory
Cow farm purchasing station
Each cow is fitted with an electronic chip to check the exact milk production
of each individual using a system of current scientific equipment.
Milk collecting stations are responsible for purchasing raw milk materials
from cow farmers, weighing and measuring milk volume, inspecting milk quality,
conserving it, and transferring it to manufacturing factories. The station can
provide information to farmer regarding the quality, price, and quantity demand
for raw commodities. Simultaneously, the milk collection facility would pay
money to cow farming households. The input supply chain plays an extremely
important role in forming a quality product that meets the needs of consumers,
thereby building long-term and sustainable development goals for the industry.
strategic suppliers at home and abroad. That is Vinamilk's main goal to ensure a
stable supply of raw materials of high quality but also at competitive prices.
Advantages of input supply
Cow's milk is obtained from the Company's farms and Vietnamese farmers,
and it goes through several levels of inspection at the purchasing and
transshipment ports. There are experts available to help farmers with cow-raising
practices, nutrition, barn hygiene, milking, milk storage and collection, and so on.
The raw, fresh milk will next be transported to a processing plant and spread out.
To ensure the best milk quality, it is checked numerous times before being put
into production; do not accept milk that is of poor quality or contains antibiotics.
Disadvantages of input supply
Milk powder, milk fat, and other ingredients (used in the making of whole
milk, pasteurized milk, yogurt, and other products) are imported from reputed
producers in the United States, Australia, and New Zealand. That is why the price
is so high; the cost of acquisition is so high.
2. Production stage of Vinamilk Company:
Raw milk
Standardized
Remove foreign gas
Stabilizers Mixing Spice
Assimilation
Pasteurization
Product Filling/Packing
Preserve
gdggdgdgfdfdbfdbf
As mentioned above, after being transferred to the milk processing
factory, the milk materials will be tested many times before being put into the
production line.
Standardized: The goal is to keep the fat content in check. Due to the
growing demand from customers for absolute safety in products, particularly
for consumer goods, fat content is an important factor that is always a top
concern. It is not healthy for one's health if too much fat accumulates in the
body over time, especially if it leads to obesity in youngsters. Implementation
principle: This stage will calculate and add the required amount of cream if
the fat level is low. This stage will also calculate and remove/separate the
cream if the fat level in the raw milk is higher than normal.
Remove foreign gas: There are many extraneous gases in raw milk that
must be removed or the milk's distinctive flavor will be lost. When there are
many foreign gases in the milk, however, the ability to transfer heat is
reduced, which raises the cost of pasteurization and assimilation, among
other things. Principle of implementation: Temperature and vacuum pressure
together.
Mixing: Create products with different flavors, bring more choices to
consumers. Principle of implementation: Mix with sufficient quantity, ensure
quality and do not lose the natural flavor of the product.
Assimilation: stabilize the emulsion system, minimize the phenomenon
of phase separation, water separation of the product. Principle of
implementation: use pressure.
Pasteurization: is to kill hazardous bacteria and microorganism spores.
Principle of implementation: Pasteurization with ultra-high temperatures
(UHT): The advanced pasteurization technology warms milk to 140 degrees
Celsius, then quickly cools it to 25 degrees Celsius, preserving the product's
natural flavor, nutritious components, vitamins, and minerals.
Product pouring: The product can preserve its fresh taste for 6 months
without preservatives thanks to aseptic filling method and sterile packaging.
Preserve: The goal is to maintain the product's quality. Requirements:
After packaging, products must be transferred to a location where they are
stored correctly in accordance with quality standards.
The following are some of the highlights of Vinamilk's milk production
process: Vinamilk has long used ISO management systems and food safety
HACCP at all of its operations, resulting in a closed production line. Every
procedure is meticulously monitored and maintained. Heat treatment
procedures are chosen and studied to assure food quality and safety while
maintaining the optimum level of nutritional content in milk. High heat
treatment modes in a short period are always prioritized by the company;
these are the most advanced technologies in the world.
3. Output distribution of Vinamilk Company:
In foreign markets: Vinamilk products are sold in over 40 countries and
regions throughout the world, including Cambodia, Thailand, Korea, Japan,
Taiwan, Turkey, Russia, Canada, the United States, and Australia. Baby milk
powder, nutritious powder, condensed milk, liquid milk, beverage, soy milk,
and yogurt are among the commodities exported.
In Vietnam market: Vinamilk has a powerful and comprehensive
distribution network in Vietnam, allowing consumers to receive products
easily, swiftly, and in the best possible conditions.
Supermarkets
Business Retailers
Vinamilk Distributors Retailers
Consumers
Minimart
Key accounts
The Vinamilk distribution channel consists of three types of channels that are
all active at the same time:
The first channel is the supermarket channel. Vinamilk is broken into
two smaller groups in this channel: Large supermarkets, such as BIG C,
METRO, and COOPMART, are classified as Type 1; convenience stores,
such as Vinmart, Circle K, SevenEleven, Familymart, and others, are
classified as Type 2. These supermarkets place orders directly with
Vinamilk branch agents.
The key accounts channel is the second channel in Vinamilk's
distribution system. Restaurants, hotels, travel, schools, and agencies are
all part of this channel. Large orders are placed directly at Vinamilk
branches by these units.
The last channel is the traditional one, as well as the most important
strategic one. The essence of this channel is that Vinamilk will manage its
distributors by signing a legal contract outlining both parties' roles, rights,
and obligations. According to Vinamilk's map, distributors may be found in
all provinces and cities around the country. Each distributor is responsible
for distributing items to wholesalers, dealers, and retailers in their
respective territory. Vinamilk is a huge supporter of all of these
wholesalers. Each distributor will have 10 to 15 salespeople who will be
managed by the distributor but trained and supported for Vinamilk. In
addition, there is a sales supervisor.
Consumers are the final factor in the output distribution of Vinamilk's supply
chain - the person who directly consumes and uses the product. They will buy
milk from agents, supermarkets or retailers, grocery stores and at the same
time will pay for milk here.
Advantages of Vinamilk's distribution strategy:
The company's management system has expanded and covered most
of the provinces and cities across the country by carefully managing and
promoting distributors and agents in its network; on average, a province has 1
to 2 distributors, and some provinces have 7 official agents. Furthermore, as
previously said, each province has a significant employee. They are given a
portion of the sales of the products sold in that province in addition to their
main income. Employees have been encouraged to extend into many small
agencies and merchants, allowing the Company's brand to reach every corner.
The knowledgeable sales team has assisted distributors in providing
better service to retailers and consumers while also promoting firm items.
In addition, the Company collaborates with supermarkets and local
distributors on a variety of promotional and marketing initiatives to promote
products and establish brands.
There are sales systems that are solely based on the use of
refrigerators and freezers. Competitors that wish to enter the food and
beverage business face a significant financial hurdle when it comes to
investing in a contemporary sales and storage system.
Disadvantages of Vinamilk's distribution strategy:
One of Vinamilk's major competitive advantages is its agent system;
yet, managing such a broad network of agents, particularly in tiny provinces
and isolated places, is a big task for any company, not just Vinamilk.
The weak marketing stage is Vinamilk's flaw. Despite the fact that the
company has good products and even strong brands, the company has failed
to communicate effectively to consumers about the strengths and qualities of
each product. There are products with fresh milk accounting for 70% to 99%,
but because they do not know how to exploit, Vinamilk has not had a
message for consumers to understand the difference between products,
especially the difference of milk products. fresh milk versus reconstituted,
pasteurized milk.
In the transportation stage: The restrictions on carrying milk only
allow for a maximum of 8 boxes on top of each other, but many Vinamilk milk
distribution agencies load up to 15 boxes, then the loading and unloading,
throwing, and damage products bag and quality of milk inside.
In the storage stage, Vinamilk's restrictions on refrigerated goods
must ensure that they can be stored for 45 days at temperatures below 6
degrees Celsius and 20 days at temperatures below 15 degrees Celsius. It just
takes two days for the milk to go sour at room temperature (between 30 and
37 degrees Celsius). Vinamilk's market is so enormous, spanning the entire
country, that careful administration and supervision from the Company's
distributors to the domestic grocery store appears unattainable. Because not
everyone has adequate systems to maintain air conditioning, refrigerators,
and freezers, particularly in impoverished rural areas.
III. PROPOSING IMPROVEMENTS
TO THE SUPPLY CHAIN
For input materials: Investigate the development of raw materials for
powdered milk manufacturing to substitute imported sources from overseas
in order to lower input costs and, as a result, product costs. Expanding
grassland to supply the need for fresh green forage for dairy cows while
restricting feed imports. Extending the fresh milk purchasing system to
maintain technical quality and prestige, with careful management from
production units, so that cow farmers may be certain that prices will not be
forced on them, while also avoiding excessive price hikes. high for the
producer. Equip dairy farming homes with contemporary milking equipment
to boost milk yield and ensure the quality of obtained milk.
For the distribution of the chain's output goods: Manage your whole
network more effectively by including all suppliers, production plants,
warehouses, and distribution networks. Reduce shipment errors and prevent
delays and shortages by streamlining and focusing on distribution tactics.
Increase the efficiency of supply chain links by openly sharing critical
information such as market demand trend data and inventory projections.
Increase the number of supervisory employees in each town and region to
more than one; guarantee that all distributors to retailers and home food
shops are carefully managed, cared for, and supported in terms of
preservation and all other required concerns.
IV.CONCLUSION
Along with the familiarity of the concept of milk (from the perspective
of formula milk), the name Vinamilk has become immensely attached and
recognizable to Vietnamese people. It's no coincidence that Vinamilk has
consistently ranked among the "Top 10 high-quality Vietnamese
commodities" for many years. And it's no surprise that when it comes to milk,
people in the nation, including me, automatically think of Vinamilk. Actually,
there are numerous reasons for Vinamilk's strong market position, but one
that everyone can see and identify is the Vinamilk Company's supply chain.
Each chain member, each unit, has its own job to play in constructing
a tight, linked supply chain. However, significant constraints remain in
Vinamilk's supply chain, such as input materials and output distribution,
causing Vinamilk's product prices to be higher than those of competitors.
Hopes that in the near future, it will be able to overcome the aforementioned
limits with appropriate solutions, allowing it to provide consumers with a
high-quality product at a reasonable price.
V. REFERENCES
1. NGỌC, P., 2021. Khám phá dây chuyền sản xuất hiện đại của Vinamilk. [online]
TUOI TRE ONLINE. Available at: <https://tuoitre.vn/kham-pha-day-chuyen-san-
xuat-sua-tuoi-tiet-trung-hien-dai-cua-vinamilk-1240666.htm> [Accessed 31
October 2021].
2. Vinamilk.com.vn. 2021. Nhà cung cấp của Vinamilk | Vinamilk Việt Nam -
Vinamilk. [online] Available at: <https://www.vinamilk.com.vn/vi/nha-cung-cap>
[Accessed 31 October 2021].
3. HẠNH, N., 2021. Vinamilk: Không ngại thách thức!. [online] Mega Story. Available
at: <https://special.vietnamplus.vn/2021/06/06/vinamilk-chuyen-minh-tu-su-
ung-bien-voi-thach-thuc/> [Accessed 31 October 2021].
4. Vinamilk.com.vn. 2021. [online] Available at:
<https://www.vinamilk.com.vn/static/uploads/bc_thuong_nien/1617354921-
428a45ccc0746e6cdfa3569800fb919bbf8e6d36b54603862caf12ac95d89383.pdf
> [Accessed 31 October 2021].
5. VILAS. 2017. Những điểm cốt lõi trong Quản trị Chuỗi Cung ứng Vinamilk - VILAS.
[online] Available at: <https://vilas.edu.vn/chuoi-cung-ung-cua-vinamilk.html>
[Accessed 31 October 2021].
