TASK RESPONSES

PART 1: PHUC LONG’S INTRODUCTION (Phuclong, n.d.)

Phuc Long Coffee is a Vietnamese coffee brand that specializes in the production and retail of
premium quality coffee products. Founded in 1968 in the city of Bao Loc, Phuc Long has grown
into a well-known and respected coffee brand in Vietnam.
- VISION: With the desire to constantly expand the market - develop sustainably, Phuc
Long strives to become a company specializing in the production and export of high-
value tea and coffee in Vietnam. Phuc Long also wishes to create a Vietnamese brand
with class and quality reflected in each product, thereby gradually asserting its position
in the international market.
- MISSION:
 Become a pioneer of the times with innovative ideas at the forefront of the tea
and coffee industry.
 Shine the brands, motivate employees, turn ideas into reality with the spirit of
cohesion, interaction, listening and respect.
 Creating high value by understanding, empathy and valuable suggestions,
satisfying customer satisfaction.

PART 2: OM AND SUPPLY CHAIN

1. Role of OM in Phuc Long company
Operation management exerts critical impacts on the successfulness of Phuc Long.
Throughout the production process, Phuc Long committed to manufacturing best-quality tea and
coffee products (coffee products will be emphasized in this report) by operating effectiveness in
all stages, from harvesting and cultivating to packaging and distributing products.
- Quality control: OM’s role at this stage is to implement the process that control the
overall quality of the products, which consists of a regular conduction of inspections and
tests, applying strict quality standards to meet and exceed the customers’ expectations.
- Supply chain management: OM also holds accountable for effectively managing
supply chain of Phuc Long, which includes examining and inspecting coffee beans, thus
sourcing them (beans taken from local farmers), establishing fine relationships with
retailers so they the delivery of coffee products to customers could be run smoothly. The
better management of supply chain, the more coffee products can be delivered to
customers (qualified for the standards), contributing to the minimization of cost and time.
- Process Improvement: Continuous and consistent improvement is what OM of Phuc
Long is always seeking for. They always research and deploy some new-generation
technology to optimize production process. Besides, OM spot for some problems
incurred during the process, thus they work for solutions to immediately fix problems,
ultimately optimizing equipment and enhancing productivity.
 - Retail Operations: As Phuc Long also launched coffee shops, OM’s role is also needed
in retail operation. This will include designing the layout of the store, motivating staff to
enhance and optimize their levels (as mentioned in the Vision statements) and making
sure customer flow is smooth so they will be satisfied with their experiences.
- Sustainability: Some environmentally friendly products are encouraged by governments
to protect the environment. Following this encouragement, the OM of Phuc Long has
promoted packages that are ecologically friendly, gradually eliminating the use of Nylon
Additionally, they also started to work with some suppliers obligating environmental
standards.

 OM to Marketing in Phuc Long

The well-being of OM in Phuc Long can have certain impacts to the Marketing effectiveness.
With regular and strict inspections on the products throughout the whole process, OM can
ensure high-quality products delivered to the customers, which elevates the company’s
reputation to higher level, as well as creates great impression for new customers. This is highly
essential to evaluate whether Marketing is successful. Great reputation is also the key to
increasing loyal customer base. Effective OM can help Marketing Department to promotes
discount systems to customers (as effective OM can cut off significant operating costs),
arousing many more customers.

 OM to Finance in Phuc Long

Production method applied and implemented by OM also affects Financial aspect of Phuc
Long. Effective production measure can help minimizing waste and utilizing available resources,
which maintains or even enhances company’s financial performance and profitability, furtherly
avoiding large amount of liabilities. Besides, effective OM really matters in managing inventory.
By implementing inventory control techniques, monitoring stock levels, and improving inventory
turnover, OM contributes to improved cash flow and reduced holding costs.

 OM to Human Resources of Phuc Long

OM’s roles also include human resource management. Whether the employees’ level could be
combined with motivation to push them work harder is the key to productiveness. Therefore, OM
can work closely with HR in establishing professional training program, so employees could be
systematically trained and they will be directed to achieve clear objectives set before, and they
can develop their further careers (based on transparent career pathways). This shows that great
HR is also attributed to the effective OM.
2. How 10 OM decisions could be generated to meet the Phuc Long’s tactical and
strategic objectives

2.1 Tactical Objectives

- Developing products: Phuc Long desire to constantly improve the quality of its
products, to consistently brings out good experiences for their customers
- Increasing brand coverage: Although having developed over 50 years and already
operated number of retail stores, coffee shops and factories, as well as made the brand
present in many shopping centers, Phuc Long still years for better brand awareness.

2.2 Strategic Objectives

- With the desire to constantly expand the market - develop sustainably, Phuc Long strives
to become a company specializing in the production and export of high-value tea and
coffee in Vietnam
- Phuc Long also wishes to create a Vietnamese brand with class and quality reflected in
each product, thereby gradually asserting its position in the international market.

2.3 Application of 10 OM decisions

- Product design: Phuc Long’s list of products include cups of coffee or tea, along with
set of tea and coffee (for those who want to cater themselves at home). Each cup is
designed specifically for each type of coffee. Phuc Long also provides instant coffee,
which is very appropriate for those who does not have many time, and additionally, some
of snacks are also available so customers could enjoy it with coffee. Phuc Long also
wants to diversify its products so customers will have many choices to eventually find the
tastes that suit them most. => Phuc Long is on way to meet the tactical objective of
developing new products
- Quality management: Phuc Long invests in a tea and coffee processing factory in Binh
Duong, equipped with many cutting-edge machines, with HACCP certification - a
process that ensures food safety and hygiene standards, with the goal guaranteeing
supply of quality products, serving the domestic market and meeting export demand.
Thanks to strict hygienic standards, Phuc Long has adapted requirements of some large
markets such as Japan, the U.S, Indonesia, etc. => On each step to affirm presence in
the World
- Process and capacity design: The process of producing coffee is meticulous, as hand-
craft skills are the key of most of the stage.
- Location strategy: Big cities with high population density are what Phuc Long is aiming
to develop their business at. In 2012, Phuc Long coffee and tea-First food and beverage
store of Phuc Long has been operated in Cresent Shopping Mall of District 7 (Hochiminh
City). This marks an expansion of Phuc Long’s business scope, as the company
successfully opened 10 stores at HCM City in 2015, and 40 stores at 3 biggest Vietnam
cities (Hanoi, HCM and Danang). By expanding business scope to the largest population
locations in Vietnam, Phuc Long is seeking for greater brand awareness.
- Layout design: The decoration style of Phuc Long coffee shops is considered as
modern, which is highly suitable with living pace of big cities, along with soft seating,
 making customers comfortable. On the other hand, the coffee shops also have some
cozy space for those who want tranquility.
- Human resources: With systematic training program that provides as many
professionalized knowledge as possible to each employee, Phuc Long is ensuring that
their workforce must have certain practical skills and knowledge satisfy all customers.
- Supply chain management: To collect high-quality coffee beans, thus to run effective
supply chain, Phuc Long is attempting to collaborate with many suppliers, additionally,
huge network of partnerships with suppliers would also ensure the delivery of products
to consumers is on time, as planned.
- Inventory management: The level of inventory could be optimized by Phuc Long, thus
declining the “inventory holding costs” but still adapting to customer’s demand and
expectations, by applying and implementing some of the methods, which will be
presented in the next sections.
- Scheduling: Phuc Long has detailed timeline for each stage to run smooth operations
- Maintenance: Factors of Phuc Long have complex maintenance programs to avoid
deterioration of facilities, which could lead to deficiency.

3. Role of Supply Chain in Phuc Long

Supply Chain of Phuc Long

Phuc Long supply chain could have several basic stages displayed as follows:
- Coffee Sourcing and Roasting: First, coffee beans will be harvested by the local
farmers and then carefully examined, and the high-quality beans will be chosen for
roasting process.
- Coffee Packaging and Labeling: Next, beans that have been through processing are
packaged and labelled for their aroma preservation.
- Inventory Management: Phuc Long must anticipate well the demand for coffee so they
can provide adequate amount for (not too excessive, not too little)
- Distribution: At this stage, packaged coffee beans will be distributed to retailers. The
company mostly applies in-house logistics, but also combines with third party logisitcs to
control distribution channels.
- Retail Sales: As mentioned above, the products of Phuc Long are displayed in various
channels, Shopping mall, coffee shops or website.

4. Analyzing effectiveness of Supply Chain in Phuc Long and its contribution.

Coffee Sourcing and Roasting: Phuc Long has been constantly searching and selecting from
the best Arabica and Robusta coffee varieties, pioneering in providing fresh coffee packed at the
place of harvest to the hands of consumers (PhucLong, n.d.). The selection of coffee beans has
been strict from the beginning as Phuc Long evaluates quality of them by 3 factors: cultivar, soil
conditions, and the altitude of the region. Besides, the purity of beans is also emphasized to
maintain the flavor and aroma of coffee. Coffee roasting is a process requiring high hand-craft
skills and understanding of each type of coffee bean of the artisan. Smaller roasting makes the
coffee less ripe and bitter, while over-roasting causes the coffee burning and losing its inherent
premium properties.
 From the first stage, Phuc Long has put strict standards on the selection and roasting of
beans with the hope to provide high-quality but completely pure coffee that could bring
customers rich flavor

The company has formed partnerships with variety of suppliers, including distributors,
transporters or even packaging suppliers. They have general regulations requires a strong
connection and combination between suppliers, to consistently run smooth supply chain.
Distribution is another effective stage. Currently, Phuc Long tea and coffee shops are present
at some big shopping Malls and supermarkets such as AEON Mall, Win Mart, etc. Recently,
Masan has joined strategic alliance with Phuc Long, agreeing on jointly developing Phuc Long
Kiosks via network of over 2200 Win Mart stores nationwide. The presence of Phuc Long
products at all Win Mart stores can easily reach many potential customers in every corner of
Vietnam. Phuc Long is hugely enjoying the partnership with Masan as their business scope is
expanding rapidly (over the scope of big cities), making it possible to increase brand awareness.
In the next 5 years, their network with Masan is expected to reach 10000 stores, bringing the
freshest and delicious coffee to 100 million consumers.

 The supply chain of Phuc Long is operating well, from the meticulous stage of sourcing
and roasting beans, to distributing the final product to customers.

PART 3: INVENTORY AND DIGITAL TECHNOLOGY

1. The application of ABC Analysis to solve inventory items that were bought for the
warehouse are not consumed
By applying ABC Analysis, stock could be classified based on its importance and value. This
method place high emphasis on the reallocation of efficient resource after considering its
value (Silver, E. A., Pyke, D. F., & Peterson, R, 1998)
 Phuc Long company can divide their inventory into 3 classes, with A being the most critical
inventory and C having the lowest value. For example, among the coffee drinks, Espresso Ice
Blended and Oreo Espresso Ice Blended are the most expensive and best-seller inventory last
year, meaning that Phuc Long should have certain control on its aspects such as taste quality,
so that these inventories will not be disposed, which can cause deficit. Meanwhile, Black Coffee
has the lowest price and less favored by public, so Phuc Long would consider it as obsolete
inventory and might think about eliminating it. This is quite a suitable method for Phuc Long as it
indicates which inventory made massive profit for the company, which one had lowest revenue,
therefore the company can make decisions on eliminating them, saving production costs. One
more advantage of this method is that company can realize the most important inventory and
then develop strategies to put its value higher, making it a signature drinks and increasing its
profit.

2. Digital Technology applied in Phuc Long

Firstly, Phuc Long has developed an e-commerce website, allowing customers to
conveniently browse its extensive product offerings, place orders, and make secure online
payments. This e-commerce platform not only expands Phuc Long's reach beyond its physical
retail locations but also provides customers with the flexibility to shop any time, anywhere.
In addition to e-commerce, Phuc Long utilizes digital marketing strategies and social media
platforms to engage with a broader audience. By running targeted online advertisements on
Youtube and Facebook (2 social platforms that have host of users), sharing product updates as
well as new product lines, Phuc Long aims to increase brand awareness and foster customer
engagement. These digital marketing efforts enable the company to stay connected with its
target market and build relationships with its customers.
 3. Assess the use of Digital Technology in solving Inventory problems
The use of Digital Technology in Phuc Long still shows some limitations, but 2 above-
mentioned methods have also contributed to managing Inventory effectively. Via social
platforms (Facebook), the company uploaded survey of demand on each type of drink that they
offered, in exchange, those responding to this will be rewarded with 50% discount when
purchasing drinks here. Through the survey, the company was able to identify tastes of each
region, then reallocated products appropriately to each region’s stores (based on that region’s
favorable tastes). This helped company avoided overstocking at stores.
Recently, Phuc Long has explored an Artificial Intelligence system that can track accurately
the current Inventory level of each store, each store could avoid overstocking (by transferring
inventory to others) and avoid stockouts (by asking for addition of inventory). AI tools could base
on current inventory situation of each store and give anticipation on future demand, therefore
inventory could be adjusted immediately to adapt to customers’ demands.
 AI Tool is expected to be widely used in chain of stores, helping the company easily
control Inventory in all stores, given the circumstances that Phuc Long company is
expanding its business rapidly.
 REFERENCE LIST

1. (No date) Phúc Long Coffee & Tea. Available at: https://phuclong.com.vn/ (Accessed: 24
May 2023).
2. VIR, V.I.R.- (2021) Masan partners Phuc Long to develop PHUC long kiosks at VinMart+
stores nationwide, VIR. Available at: https://vir.com.vn/masan-partners-phuc-long-to-
develop-phuc-long-kiosks-at-vinmart-stores-nationwide-84405.html (Accessed: 25 May
2023).
3. Silver, E. A., Pyke, D. F., & Peterson, R. (1998). Inventory management and production
planning and scheduling. John Wiley & Sons.