DANANG UNIVERSITY

DANANG UNIVERSITY OF ECONOMICS



SUBJECT: SUPPLY CHAIN MANAGEMENT

VINAMILK'S MILK SUPPLY CHAIN

Lecturer: Nguyễn Phúc Nguyên

Class: 47K25.1

Group: SC

Students: Nguyễn Thanh Chương

Nguyễn Hà Điệp

Nguyễn Thuỳ Dung

Trần Quỳnh Giao

Lê Ngô Thanh Hải

Lê Hà Nhật Quỳnh

Mai Thanh Thiên

Da Nang, September 28, 2023

2
 TABLE OF CONTENTS

CONTENT......................................................................................................................1
I. Introduction:.............................................................................................................1
1. Overview, business sectors and main products:..................................................1
1.1. Overview of Vinamilk:.................................................................................1
1.2. Business sectors:..........................................................................................1
1.3. Main products:..............................................................................................2
2. Vision, mission, core value, business philosophy:..............................................3
2.1. Vision:..........................................................................................................3
2.2. Mission:........................................................................................................3
2.3. Core value:...................................................................................................3
2.4. Business Philosophy:....................................................................................5
3. Development strategy:.........................................................................................5
4. Corporate governance:........................................................................................5
4.1. Organization chart:.......................................................................................5
4.2. Function and responsibility of Board of directors:.......................................6
4.3. Independence of directors:...........................................................................6
5. Business situation:...............................................................................................7
6. History of establishment and development:........................................................7
6.1. Vinamilk's formation period from 1976 to 1986:.........................................8
6.2. The “Đổi mới” period during 1986 – 2003:.................................................8
6.3. The equitization period from 2003 to present:.............................................9
II. Vinamilk's UHT fresh milk supply chain:............................................................10
1. Overview of Vinamilk's UHT fresh milk supply chain:....................................10
2. Vinamilk's UHT fresh milk supply chain model:..............................................10
2.1. Suppliers:....................................................................................................11
2.2. Manufacturers:...........................................................................................13
2.3. Distributor:.................................................................................................15
2.4. Retailers:.....................................................................................................16
2.5. Consumer:..................................................................................................17
3. Flows:................................................................................................................17
3.1. Information flow:.......................................................................................17
3.2. Product line:...............................................................................................18
 3.3. Financial flow:............................................................................................18
4. Process view:.....................................................................................................18
4.1. Cycle view:.................................................................................................18
4.2. Push/Pull:...................................................................................................20
III. Supply chain drivers and metrics:.......................................................................23
1. Financial measures of performance:..................................................................23
1.1. Return on equity (ROE):............................................................................23
1.2. Return on asset (ROA):..............................................................................24
1.3. Accounts payable turnover (APT):.............................................................25
1.4. Accounts receivable turnover (ART):.........................................................26
1.5. Inventory turnover (INVT).........................................................................26
1.6. Property, plant, and equipment turnover (PPET):......................................27
1.7. Cashtocash (C2C) cycle:............................................................................27
2. Drivers of Supply Chain Performance:.............................................................28
2.1. Facilities:....................................................................................................28
2.2. Inventory:...................................................................................................35
2.3. Transportation:...........................................................................................40
2.4. Information:................................................................................................43
2.5. Sourcing:....................................................................................................45
2.6. Pricing:.......................................................................................................51
IV. Conclusion:..........................................................................................................53
1. Problems of the milk supply chain:...................................................................53
1.1. Productivity for milk:.................................................................................54
1.2. Milk quality control:...................................................................................55
2. Solution:............................................................................................................55
2.1. Before purchasing milk ingredients:..........................................................56
2.2. While purchasing milk ingredients:...........................................................56
2.3. After purchasing milk ingredients:.............................................................57
3. Lesson learned:..................................................................................................57
REFERENCES..............................................................................................................60
 TABLE OF FIGURES

Figure 1. Vinamilk's logo................................................................................................1

Figure 2. Vinamilk condensed milk................................................................................2
Figure 3. Vinamilk powdered milk..................................................................................2
Figure 4. Vinamilk fresh milk.........................................................................................3
Figure 5. Vinamilk yogurts..............................................................................................3
Figure 6. Business philosophy of Vinamilk....................................................................5
Figure 7. Organization chart of Vinamilk........................................................................6
Figure 8. Vinamilk's achievement...................................................................................7
Figure 9. Vinamilk UHT fresh milk supply chain model..............................................10
Figure 10. Vinamilk's dairy farm system at home and abroad......................................11
Figure 11. Vinamilk packaging from Tetra Pak and Combibloc...................................12
Figure 12. Dairy factory system of Vinamilk................................................................13
Figure 13. Vinamilk's milk production process.............................................................14
Figure 14. Flows of supply chain..................................................................................17
Figure 15. Cycle view...................................................................................................18
Figure 16. Push strategy................................................................................................20
Figure 17. Pull strategy.................................................................................................21
Figure 18. Vinamilk's ROE...........................................................................................24
Figure 19. Vinamilk's ROA...........................................................................................24
Figure 20. Vinamilk's APT............................................................................................25
Figure 21. Vinamilk's ART............................................................................................26
Figure 22. Vinamilk's INVT..........................................................................................26
Figure 23. Vinamilk's PPET..........................................................................................27
Figure 24. Vinamilk's C2C............................................................................................27
Figure 25. Vinamilk's factory system............................................................................29
Figure 26. The first Vinamilk factory in Cambodia......................................................30
Figure 27. Driftwood Dairy Factory, El Monte, California, USA.................................30
Figure 28. Vinamilk's dairy farm system.......................................................................31
Figure 29. Vinamilk's warehouse..................................................................................33
Figure 30. Vinamilk's supply chain...............................................................................37
Figure 31. Road transport of Vinamilk..........................................................................40
Figure 32. Raw material, unfinished products transportation.......................................41
Figure 33. Vinamilk's Holstein Friesian (HF) cattle breed............................................45
Figure 34. Transporting dairy cows to Vinamilk farm..................................................46
Figure 35. Vinamilk cooperates with Vietsugar............................................................47

TABLE OF TABLES

Table 1. Vinamilk's financial performance measures....................................................23

Table 2. Vinamilk business cycle from 2018-2021......................................................34
Table 3. Impacts of facilities.........................................................................................34
Table 4. Vinamilk's inventory output in the period 2018-2022.....................................35
Table 5. Impacts of inventory........................................................................................39
Table 6. Impacts of transportation.................................................................................42
Table 7. Impacts of sourcing.........................................................................................50
Table 8. Impacts of pricing............................................................................................53
 CONTENT

I. Introduction:

1. Overview, business sectors and main products:

1.1. Overview of Vinamilk:

 Company name: Vinamilk Dairy Joint Stock Company (Vinamilk)

 Current logo:

Figure 1. Vinamilk's logo

 Former name: Southern Coffee - Dairy Company
 Founded year: 1976
 Headquarter: No. 10 Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh
City
 Phone: (84.28) 5415 5555
 Fax: (84.28) 5416 1226 - 5416 1230
 Tax code: 0300588569
 Website: www.vinamilk.com.vn
 Stock code: VNM (HOSE)

Vinamilk, Vietnam's largest food processing company, is 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:

The principal products of Vinamilk are condensed milk, powdered milk, fresh
milk, soya milk, yogurts, ice-cream, cheese, fruit juice, coffee and other products
derived from milk.

Figure 2. Vinamilk condensed milk

Figure 3. Vinamilk powdered milk

 Figure 4. Vinamilk fresh milk

Figure 5. Vinamilk yogurts

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

2.1. Vision:

“Becoming the leading symbol of trust in Vietnam about 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:

“Becoming the leading symbol of trust in Vietnam about nutrition and health
products serving human life”
 INTEGRITY RESPECT

Integrity, Honesty in conduct and in Respect yourself, Respect your colleagues,

all transactions. Respect the Company, Respect partners,
Cooperate in respect.

EQUAL MORALITY

Be fair to employees, customers, Respect established standards and act

suppliers and other stakeholders. ethically.

COMPLIANCE

Comply with the Law, Code of Conduct and the Company's regulations, policiesand
regulations
 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 companions. We act with a customer-centered approach
and commit to respond to all their needs.”

Figure 6. Business philosophy of Vinamilk

3. Development strategy:

Maintaining the No.1 position in Vietnam market and aiming to reach the Top 30
of World’s Largest Dairy Companies in terms of revenue, Vinamilk has identified a
development strategy with three main pillars for execution, including:

 Leading in highly applicable innovations

 Consolidating the leading position in the Vietnam’s dairy industry

 Becoming the most valuable dairy company in the Southeast Asia

4. Corporate governance:

4.1. Organization chart:

The organization Chart of Vinamilk is shown in a professional manner in which

departments are divided systematically and reasonably with specific hierarchy of
responsibility for each member and function in the company.
 Figure 7. Organization chart of Vinamilk
4.2. Function and responsibility of Board of directors:

 Building longterm strategy and determining goals & objectives of the company
 Orienting and monitoring management activities
 Hiring and evaluating CEO performance
 Organizing shareholder’s meeting and guaranteeing shareholders’ interests
 Managing the company’s share capital and assets
 Publishing information and taking responsibility for the transparency of
information

In this section, functions and responsibilities of the Board of directors in

Vinamilk are provided consistently and clearly. This point partly contributes to the
effectiveness of the corporate governance in the company.

4.3. Independence of directors:

According to the Annual report 2022, Vinamilk has 10 members in the Board of
directors, but there are only 2 independent directors (Mr. Nguyen Hanh Phuc and Mr.
Do Le Hung).
 In order to assure that directors are serving shareholders, global best practice
recommends that at least threequarters of board members should be independent.
However, Vinamilk has been performing only ⅕ on this rate which does not reach the
company’s requirement.

5. Business situation:

According to Brand Finance, Vinamilk is valued at 2.8 billion USD, an

impressive increase of 18 per cent compared to 2021, and continues to be the most
valuable food industry brand in Vietnam.

Vinamilk was also honored to receive the title of “The 6th largest dairy brand in
the world”. It currently stands as the sole representative from Vietnam and Southeast
Asia among the top 40 leading dairy companies worldwide in terms of revenue. Its
products are distributed to 57 different countries and territories.

Figure 8. Vinamilk's achievement

In Vietnam, Vinamilk has been honored as a national brand for 12 consecutive
years and maintains top positions in brand ranking of prestigious international
organizations. Vinamilk is currently the only representative of Vietnam and Southeast
Asia in the Top 40 global largest dairy companies in terms of revenue, according to the
Plimsoll report from the UK.

6. History of establishment and development:

Vinamilk Dairy Company has a history of formation and 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.

6.1. Vinamilk's formation period from 1976 to 1986:

On August 20, 1976, Vietnam Dairy Products Company (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.

By 1982, the Southern Coffee and Milk Company was transferred to the Ministry
of Food Industry and was renamed Milk Coffee Confectionery Enterprise I.

6.2. The “Đổi mới” period during 1986 – 2003:

In March 1992, the Enterprise of Milk Coffee Confectionery I, officially

renamed to Vietnam Dairy Company (Vinamilk) directly under the Ministry of Light
Industry. The company specializes in the production and processing of dairy products.

By 1994, Vietnam Dairy Products Company built another factory in Hanoi in

order to develop their market in the North more. This event raised the total the
company's factories increased to 4. The construction is part of the strategy to expand
and develop so as to meet the customer needs in Northern Vietnam.

In 1996, Joint venture with Quy Nhon Frozen Joint Stock 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 2000, Can Tho dairy factory was built in Tra Noc Industrial Park with the aim
to better meet the needs of consumers in the Mekong River Delta. During this time, the
Company also built a Logistics Enterprise located at 32 Dang Van Bi, Ho Chi Minh
City. In May 2001, the company launched the Can Tho Dairy factory.
 6.3. 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.

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.

In the period of 2010 2012, the enterprise built a powdered 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.

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.

The factories all meet the most stringent international 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.
 II. Vinamilk's UHT fresh milk supply chain:

1. Overview of Vinamilk's UHT fresh milk supply chain:

Known as the No. 1 milk brand in Vietnam, Vinamilk's name has always been
associated with the image of UHT fresh milk since its early years of establishment.
Based on the 3 dairy factories left by the old regime, Vinamilk has mixed and
produced a line of UHT fresh milk products that every Vietnamese person knows. That
popularity has brought Vinamilk a huge amount of revenue, helping Vinamilk grow to
this day. However, currently, Vinamilk faces many challenges in the Vietnamese UHT
fresh milk market from serious competitors. To be able to maintain the position of its
key product line, Vinamilk needs to enhance the competitiveness of UHT fresh milk
by improving and developing the supply chain of Vinamilk UHT fresh milk.

In addition, as life and society develop, life needs increase, health factors are
increasingly focused on promoting the growth of nutritional products, especially
products such as milk. The liquid milk market has also expanded, customers range
from children (promoting physical development, intelligence...) to the elderly
(supplementing nutrition due to anorexia, osteoporosis, illness...) or even milk for
dieters. Milk is an excellent source of nutrients containing many vitamins and
minerals, including vitamin B12, calcium, .... It is a product made from organic
ingredients, so it is easily spoiled by microorganisms, fungi, and harmful bacteria. For
that reason, Vinamilk has focused on building an optimal supply chain system to
protect products most effectively.
 2. Vinamilk's UHT fresh milk supply chain model:

Figure 9. Vinamilk UHT fresh milk supply chain model

2.1. Suppliers:

2.1.1. Materials:

Fresh milk: The company has proactively invested in industrialscale farms and
increased the purchasing and development of fresh milk areas from more than 6000
Exclusive Farmer Partners and 14 Owned Farms in Vietnam, which helps Vinamilk be
selfsufficient in fresh milk raw materials for production. Vinamilk's dairy farm system
is present across the country including the provinces of Tuyen Quang, Binh Dinh,
Nghe An, Thanh Hoa, Da Lat, and Lam Dong. Among them, Nghe An dairy farm
meets Globe G.A.P standards and Lam Dong organic dairy farm meets European
organic standards recognized by Control Union (Netherlands). In addition, to store
fresh milk, VNM also built 83 Raw Milk Collection Stations. Currently, the total herd
of cows providing milk for the company, including Vinamilk farms and farmers who
have signed contracts to sell milk to Vinamilk, is more than 160,000 cows. Providing
more than 1000 tons of raw fresh milk every day to produce fresh milk products.
 Figure 10. Vinamilk's dairy farm system at home and abroad
Dairy cow: In addition to domestic cow breeds, Vinamilk has proactively
imported breed cows from the US, Australia, and New Zealand to build a herd of
quality cows with nutritious and safe milk.

Paper packaging: To preserve the freshness and nutrition of Vinamilk milk for 6
months without using preservatives, Vinamilk is currently using two of the world's
leading paper box packaging suppliers, Tetra Pak (Sweden) and Combibloc
(Germany).

Figure 11. Vinamilk packaging from Tetra Pak and Combibloc

Sugar: Vinamilk imports sugar from Raw Materials Production and Supply
Factory.

2.1.2. Equipment:

All Vinamilk products are manufactured on modern machinery and equipment

systems from Sweden, European G7 countries and are strictly controlled by a quality
management system according to ISO international standards by the world's leading
certified company. At the same time, all Vinamilk products are guaranteed to be fully
disclosed in accordance with the law and are constantly under direct and indirect
supervision by authorities.

2.1.3. Process of processing raw materials and delivering them to the

factory:

The cows are raised, cooled, and listened to music every day by Vinamilk
purebred from the US and milked through a largescale milking system. After that,
fresh milk lines are selected and controlled extremely strictly to ensure food safety and
hygiene. After inspection, fresh milk is transported from Vinamilk farms to the nearest
factories in the shortest time with a modern refrigerated tank system, preserving milk
at temperatures below 6 degrees Celsius to keep the fresh flavor. Delicious and
essential nutrients. The milk receiving station will filter and cool milk completely
automatically, and the milk will be best preserved and ready for the next production
and packaging process.

2.2. Manufacturers:

2.2.1. Vinamilk's dairy factories:

Up to now, Vinamilk has 13 domestic factories spread across North and South
with largescale investment and application of worldleading technology to serve
production. Among them is the MEGA super factory, one of three large super factories
in the world. Manufacturing plants include:

 Tien Son Dairy Factory  Lam Son Dairy Factory

 Nghe An Dairy Factory  Da Nang Dairy Factory
 Binh Dinh Dairy Factory  Dielac Dairy Factory
 Vietnam dairy factory  Vietnam powdered milk factory
 Can Tho Dairy Factory  Saigon Dairy Factory
 Thong Nhat Dairy Factory  Truong Tho Dairy Factory
 Vietnam beverage factory
 E

Figure 12. Dairy factory system of Vinamilk

The factories help Vinamilk reach a capacity of 5.1 million liters of milk per day.
All products are manufactured on the world's most modern production line system of
Tetra Pak from Sweden and are produced according to a specific process.

2.2.2. Vinamilk's milk production process:

Figure 13. Vinamilk's milk production process

 Fresh milk raw materials, after being imported from suppliers, are brought to the
manufacturer and carried out in the production stages. A production process will take
place through 5 steps: Standardization, deaeration, homogenization, sterilization and
packaging into finished products.

Step 1: Standardize. This process will help measure whether the milk ingredients
meet the requirements. If not, adjust accordingly and finally process and clean the
milk. Before packaging and distribution, the milk is tested again to ensure that it meets
quality and safety standards. Microbiological testing, synthetic testing and taste testing
can be performed.

Step 2: Exhaust hood. TGases dispersed and dissolved in milk, such as O2,
catalyze reactions that change milk during storage. Thereby improving the taste of
milk. In addition, air removal also increases heat transfer efficiency for the sterilization
and homogenization process. Helps save energy.

Step 3: Assimilation. Smaller fat globules are evenly distributed in the emulsion
system, thereby increasing the uniformity of milk products, and creating conditions to
support subsequent production processes. Homogenization is performed at 6070°C,
before or after the sterilization step. If the device is homogenized at the end of the
sterilization step, it must be sterile

Step 4:Pasteurized.

 The direct system heats milk by direct contact with superheated steam
under a certain pressure. The indirect system uses a heat exchanger where the
superheated steam heats the milk indirectly through a stainless steel screen in
the form of tubes or plates. When the sterilization temperature is reached, the
milk enters the holding tube. The temperature of the milk and the time required
to pass through this holding tube are the nominal conditions usually specified
for the UHT process.
 The initial cooling of the product in direct systems occurs very quickly.
It is passed through a vacuum chamber to remove water condensed during the
steam heating process. And in doing so the temperature of the product returns
close to the temperature at which it was heated, usually around 75 °C.
  During the final cooling step in the direct system and during both
cooling steps in the indirect system, heat from the hot milk is transferred to the
cold milk during the preheating steps to regenerate the heat.

Step 5: Pour the product into sterile packaging. Is a very important step. After
cooling, the product is transferred to the final packaging and sealed in absolutely
sterile conditions.

2.3. Distributor:

Traditional distribution channels: Traditional channels distribute more than 80%

of the company's output with 220 distributors. In addition, Vinamilk has opened 14
showrooms in big cities such as Hanoi, Da Nang, Ho Chi Minh City and Can Tho to
distribute its products. Besides, Vinamilk also owns official distributors in the United
States, Europe, Australia and Thailand, Cambodia and neighboring countries.

Vinamilk supermarket channel is divided into 2 main types: Large supermarkets

such as Big C, Metro,...Type 2 is small supermarkets such as: Fivimart, Citimart,
Vinmart,...These supermarkets are placed directly with major supermarkets.
representing some Vinamilk branches.

Key account: includes restaurants, hotels, schools, agencies, etc. Units directly
place orders with Vinamilk branch representatives in large quantities.

Ecommerce channel: Vinamilk has an online sales website called eShop

Vietnamese milk dream. In addition, Vinamilk's milk lines are currently available on
many ecommerce platforms such as Shopee, Lazada... to meet the shopping needs of
people everywhere.

Management and implementation plan: Distributor is assigned to distribute the

company's products according to a certain price policy to the market and earn profits
from product commissions. If more products are sold, the profit will be higher, and
vice versa. To effectively manage distribution channels in the market, Vinamilk is
using the most typical modern information technology applications, which are:

Oracle E Business Suite 11i system: Officially put into operation in January
2007. Connect to 13 locations including headquarters, factories, warehouses
nationwide.
 Applying customer relationship management solutions: This is an effective
solution to reach Vinamilk's own customers, helping the company collect complete
information and customer needs from which to make policies. Build and develop the
most suitable distribution network.

Enterprise Resource Planning System: Employee support tool, allowing

Vinamilk distribution network across the country to connect information to the center
in both online or offline situations. Centralized information helps Vinamilk provide
timely solutions as well as accurately support planning and bring satisfaction to
customers.

2.4. Retailers:

A wide distribution and sales network is an essential factor for operational

success and allows Vinamilk to capture a large number of customers ensuring the
introduction of new products and effective marketing strategies. results across the
country. Currently, Vinamilk has more than 251,000 retail points in all 63 provinces
and cities across the country

Management and implementation plan: The company has a separate pricing

system suitable to the business characteristics of each channel and each location to
meet the purchasing needs of consumers.

2.5. Consumer:

Individual consumer: Vinamilk's target consumers are interested in health and

nutrition issues, like nutritious foods that are beneficial for physical and mental health.
The main customer groups of Vinamilk's pasteurized fresh milk products are
concentrated in the groups of Teenagers, Young Adults, and Adults, and the majority
are women.

Consumers are businesses: Consumer organizations that use Vinamilk products

such as schools, cafeterias, bakeries... consume Vinamilk products in meals and in
processing.
 3. Flows:

Figure 14. Flows of supply chain

3.1. Information flow:

The information system at Vinamilk is designed based on the integration of ERP

management solutions, which integrates many different information technology
solutions such as Microsoft's solomon software, customer management solutions.
Oreal's CRM and FPT's sales software. At the end of the day, all work results are
transferred to Vinamilk's server. This management method helps Vinamilk control
distributors' activities quickly and effectively. With unique codes set for each
distributor, Vinamilk can easily know which distributors sell effectively and even
which products they sell best.

3.2. Product line:

Vinamilk will purchase fresh milk raw materials from dairy cows of households
and then transfer these raw materials to manufacturers. Then from this source of pure
fresh milk, the factory will produce sterilized fresh milk. Sterilized milk will be poured
and packaged in sterile packaging to form a finished product. After completing the
packaging, Vinamilk will export a large quantity of goods to the market. From there,
that batch of goods will be distributed into many small batches and shipped to retailers
across the country. Customers can easily find and buy the company's products.

3.3. Financial flow:

Shows customer payment activities with suppliers, including transactions.

Represents customer payment activities with suppliers, including credit transactions,
payment and escrow processes, and title exchange arrangements.

When a customer buys a product, the customer must pay the retailer. That cash
flow continues to be transferred to the distributor. Where the product was delivered to
the retailer. Next, the cash flow will flow to the production factory. Finally, the cash
flow will go to the dairy farm that provides raw materials for the company.

4. Process view:

4.1. Cycle view:

Figure 15. Cycle view

 Customer Order Cycle:

 Customers order: Customers order Vinamilk's pasteurized milk products
through various channels, such as supermarkets, convenience stores, and online
orders.
 Order processing: Vinamilk receives and processes orders from customers,
determines the products that need to be sent and the delivery location.
 Delivery: After processing, pasteurized milk products are packaged and
delivered to the customer's address.
 Payment: Customers must pay for the products they have received.
 Replenishment Cycle:
 Demand forecasting: Vinamilk conducts product demand forecasting to
determine when it needs to refill the warehouse.
 Ordering from suppliers: Based on demand forecasts, Vinamilk places orders
for supplies of fresh milk and other ingredients necessary for the production of
pasteurized milk.
 Receive goods from suppliers: After placing an order, Vinamilk receives goods
from the supplier and checks the quality.
 Production and storage: Fresh milk and other raw materials are used during
production and storage to ensure there is enough stock available for the
production of the next product.
 Manufacturing Cycle:
 Processing and production: Vinamilk processes fresh milk and other ingredients
into pasteurized milk products.
 Quality Testing: Products are quality tested during production to ensure that
they meet location, safety and food quality standards.
 Packaging: After production, the product is packaged into boxes or bottles,
preparing it for distribution.
 Procurement Cycle:
 Determine purchasing needs: Vinamilk determines the raw materials and
supplies necessary to produce pasteurized milk products.
 Identifying sources of supply: The company identifies suppliers and sources of
fresh milk and other raw materials.
 Negotiation and ordering: Vinamilk conducts negotiations with suppliers, signs
contracts and orders necessary materials.
 Receiving and checking: After placing an order, Vinamilk receives goods from
the supplier and checks the quality before using in the production process.
 These cycles create a complex and closed supply chain, ensuring that Vinamilk
can produce, distribute and provide pasteurized milk products to customers
effectively and reliably.
 4.2. Push/Pull:

4.2.1. Push Strategy:

Figure 16. Push strategy

Vinamilk applies this strategy by increasing the production of pasteurized milk

and providing it to convenience stores and supermarkets before there is specific
demand from customers, then promoting through promotions or discounts to create
demand. This helps ensure that products are always available when consumers need
them.

 Strategic location for warehouses: Vinamilk chooses strategic locations for their
warehouses near city centers and urban areas. This helps them easily access the
market and customers.

 Mass production: Vinamilk often produces pasteurized milk on a large scale at

their manufacturing plants. Mass production helps them maintain ready
inventory to supply to the market and distribution partners.

 Storage and distribution to warehouses: Pasteurized milk after production will

be pushed to storage warehouses before being supplied to subsequent
distribution channels. These warehouses often contain large quantities of
pasteurized milk produced.

 Wide distribution: The company focuses on distributing the product to a variety

of retail outlets, including convenience stores and supermarkets, to ensure that
the product is available in many different places and is easily accessible.
accessible to consumers. Dealers and convenience stores will then attempt to
 sell the product to end customers based on availability and promotions from the
manufacturer.

 Promotions and discounts: To create interest and stimulate shopping,

pasteurized milk companies can launch promotions and product discounts at
supermarkets and convenience stores.

Advantages:

 Ability to quickly respond to customer needs

 Suitable for products with limited shelf life such as milk, etc.
 Solve product shortages and ensure that products are available when they are
needed.

Disadvantages:

 There is a risk of high inventory if the forecast is not accurate

 Production and warehouse management costs may increase

4.2.2. Pull strategy:

Figure 17. Pull strategy

Vinamilk also carries out marketing and advertising campaigns to create interest
from consumers. These campaigns can focus on creating a strong brand for their
pasteurized milk products and encouraging consumers to purchase the product based
on their decision.
 Ordering from distributors: Distributors will only order from manufacturers or
warehouses when they receive orders from supermarkets and convenience
stores. They will provide products based on actual needs from customers.

 Production and supply based on orders: UHT milk manufacturers will produce
and package products based on specific orders from distribution agents. The
product is then sent to the retailer where it was ordered.

 Distribution: Pasteurized milk products are sent directly to retail outlets or final
customers upon their request. Customers order and receive products when they
need them.

 Interaction with customers: Businesses can interact with customers to listen to

opinions, provide aftersales service, and collect feedback to improve products
and services.

Advantage:

 Storage Optimization: Traction strategies reduce the need for bulk storage at
warehouses or distribution centers.

 Save production costs: Do not produce in advance but only after an order is
placed to help avoid excess product inventory.

Disadvantages:

 Difficulty in supply management: Creates challenges in managing the

production process and product supply when there is a sudden increase in
demand.

 Risk of insufficient availability: In cases where fast delivery is required, a pull

strategy can lead to insufficient product availability.

III. Supply chain drivers and metrics:

1. Financial measures of performance:

Table 1. Vinamilk's financial performance measures

Financial measures 2018 2019 2020 2021 2022

 ROE 40.49 37.79 35.02 30.01 24.08

ROA 28.04 25.79 23.83 20.7 16.73

APT
14.02 7.79 9.34 9.35 8.49

ART 31.1 16.43 15.6 14.26 13.32

INVT 10.12 5.66 6.47 5.93 5.86

PPET 7.87 3.99 4.15 4.59 4.87

C2C 0.06 0.11 0.11 0.13 0.13

1.1. Return on equity (ROE):

The main summary measure of a firm’s performance.

Measures the return on investment made by a firm’s shareholders, return on assets.

Figure 18. Vinamilk's ROE

 The company's ROE has decreased continuously during this period from 40.49%
in 2018 to 24.08% in 2022. This shows that the business is having difficulty generating
returns on equity. .A decrease in ROE may reflect a weakness in the company's
financial performance. This can be due to many reasons, such as decreasing profits,
increasing debt, or increasing equity without generating corresponding profits.

1.2. Return on asset (ROA):

Measures the return earned on each dollar invested by the firm in assets.

Figure 19. Vinamilk's ROA

ROA has decreased continuously during this period from 28.04% in 2018 to
16.73% in 2022. This shows that businesses are having difficulty generating profits on
their total assets. A decrease in ROA may reflect a weakening in the company's
financial and business performance. It may be due to a decrease in profits or an increase
in total assets without a corresponding increase in profits.

1.3. Accounts payable turnover (APT):

An important ratio that defines financial leverage.

 Figure 20. Vinamilk's APT
There was volatility in the company's APT index between 2018 and 2022. The
APT index dropped sharply from 14.02 in 2018 to 7.79 in 2019, possibly reflecting a
significant change in the way the company manages assets or conducts business
activities. It then increased to 9.34 in 2020 and remained at around 9.35 and 8.49 in
2021 and 2022, indicating improvement in business operations or asset management
optimization.

1.4. Accounts receivable turnover (ART):

Figure 21. Vinamilk's ART

The ART Index continuously decreased from 31.1 in 2018 to 13.32 in 2022. This
shows that businesses are taking longer to collect money from customers. A decrease in
ART may indicate a need to improve financial management and accounts receivable
collection processes. It may be necessary to review credit policies, monitor accounts
receivable more closely, and take measures to minimize risk.

1.5. Inventory turnover (INVT)

Figure 22. Vinamilk's INVT

The INVT index decreased significantly from 10.12 in 2018 to 5.66 in 2019,
businesses are having difficulty managing inventory or may be undergoing a change in
their business model. One year later, the INVT Index increased slightly from 5.66 to
6.47. This increase could indicate a small improvement in inventory management or a
change in the business model. It then remains stable at around 5.93 in 2021 and 5.86 in
2022

1.6. Property, plant, and equipment turnover (PPET):

Figure 23. Vinamilk's PPET

 The PPET index decreased from 7.87 in 2018 to 4.87 in 2019, showing that
businesses are using fixed assets ineffectively or changing their business model. Slight
growth of PPET from 2019 to 2022 could show businesses leveraging their fixed assets
to generate revenue. This could be the result of improved production processes or
efficient use of assets

1.7. Cashtocash (C2C) cycle:

Measures the average amount of time from when cash enters the process as cost to
when it returns as collected revenue.

Figure 24. Vinamilk's C2C

From 2018 to 2020, C2C increased from 0.06 to 0.11. This could indicate that the
business has taken longer to convert cash into revenue or that there has been an increase
in asset and liability management. The C2C index remained stable from 2020 to 2022,
at 0.11 in both years, possibly indicating a stability in the business's cash flow
management process during this period.

2. Drivers of Supply Chain Performance:

2.1. Facilities:

Facilities are the places in the supply chain network where product is stored,
assembled, or fabricated. The two major types of facilities are production sites and
storage sites.
 2.1.1. Production sites:

From 3 small factories at first, Vinamilk has now enlarged its scale to 16
factories, 14 dairy farms.

a. Production and processing of beverages and dairy products:

In the production and processing of beverages and dairy products, Vinamilk has
invested in 14 domestic factories including 13 dairy factories and Moc Chau factory
merged from the same dairy brand name. The Vietnam Dairy Factory and the Vietnam
Powdered Milk Plant are categorized as "mega factories." Vinamilk initiated the
operation of both facilities in 2013, signifying a significant milestone for the company
during its subsequent development phase.

With those numerous dairy factories all over the country supported by a wide
distribution network, they have established Vinamilk's strength in the supply chain.
 Figure 25. Vinamilk's factory system
Vinamilk also owns 3 foreign dairy factories named Driftwood, Vinamilk Europe
Sp.z O.O and Angkor Milk which are located in the USA, Poland and Cambodia
respectively.
 Figure 26. The first Vinamilk factory in Cambodia

Figure 27. Driftwood Dairy Factory, El Monte, California, USA

b. Dairy farming, raw material production:

Vinamilk dairy factory operates on an automatic, closed line, from input

materials to product output. At the present, there are 14 dairy farms, 80 raw milk
collection stations and 1 raw milk center which is located in Cu Chi, Ho Chi Minh
city. Vinamilk owns an international standard dairy farm system in Vietnam and is
investing to develop farm projects abroad. Many cattle raising households and
cooperatives in Binh Dinh, Ho Chi Minh City, Lam Dong and Long An provide fresh
milk for the company, contributing to the company's nationwide milk supply network,
further enhancing the nationwide supply system..
 Figure 28. Vinamilk's dairy farm system
The list of Vinamilk current and under development dairy farms all over Vietnam

Outstanding features of Vinamilk dairy factory system:

 Huge cold storage tank system: Raw fresh milk is always kept cold in a
system of 3 modern tanks with the largest capacity in Vietnam today, with
an extremely large capacity of up to 150m3/tank, holding more than 1450
tons of fresh milk.
 Centrifugal bacteria separation production technology: Helps optimally
eliminate most harmful bacteria, while preserving the nutrients and natural
flavor of milk.
 Closed process, 100% automation: The factory has the world's leading level
of automation and integration today, 100% automatic from data entry to
finished product warehouse. The production process is completely
automated thanks to the application of integrated technology: Tetra Plan
 Master, helping Vinamilk easily monitor, control and easily continuously
control the production process of product quality.

In addition, Vinamilk has applied a number of advanced 4.0 technologies in

farm management.

 Optimal ration-managament system: Measure and ensure to deliver right

amount of food with good quality to the cows according to their age and
development stage
 Large scale milking-machine system: Workable with over 200 cows at
once. Identify, collect and manage individual's data via electronic chips
 Automatic maintenance system: Automated reminders to support manage
and plan the efficient operation of more than 60 vehicles and 300
equipments
 LELY JUNO - automatic feed pusher: Programming to supply food and
play music for cows to help them relax while eating
 Activities and health control system: Collecting, analyzing and reporting
health status through electronic chips attached to each cow
 Large and modern breeding system (2000 cows/cage): Creating an ideal
living environment like a "resort" for the happy cows by using advanced
cooling technology

2.1.2. Storage sites:

Vinamilk has invested in 2 warehouses, namely:

 Ho Chi Minh City Logistics Enterprise: 32 Dang Van Bi, Thu Duc
District, Ho Chi Minh City.
 Hanoi Logistics Enterprise: Km 10/National Highway 5, Gia Lam District,
Hanoi city

These warehouses specialize in storing raw materials for production and finished
products for distribution.

Vinamilk is proud to take the lead in building the first and largest smart
warehouse system in Vietnam with a capacity of nearly 30,000 lots.
 The warehouse system is called smart warehouse. Built by the German company
Schafer. Vinamilk is one of the first customers to apply this technology. Guided rail
(RGV) pallet handling and transportation system with 370 meters of track and 15
dynamic loading trays, each capable of carrying 2 pallets.

The automatic pallet storage system optimizes space, including conveyors to

support workers' loading and unloading activities. Automatically arrange pallets and
have the ability to retrieve any. At the shipping area, the pallet sorting system
automatically divides into 16 lanes according to the gravity roller conveyor principle.
The entire system is controlled and managed by a core software from SSI Schaefer.
Called Wamas Warehouse Management System.

In addition, the application of automatic machine systems and integration of

automation technology solutions, using LGV Smart Robots helps ensure maximum
product safety in production of Tetra Plant Master, Wamas Warehouse Management
System brought Vinamilk dairy factory to remarkable numbers. The LGV robot is the
most advanced generation of robots in the world, light, quick to operate and consumes
little energy. LGV robots operate completely automatically, controlled by a central
computer system, helping the production process and transporting finished products to
smart warehouses always quickly, accurately, and achieving production efficiency.
Optimal.With the above utilities, LGV robot has become the most modern factory in
Vietnam and meets a large amount of market demand.
 Figure 29. Vinamilk's warehouse
2.1.3. Impacts of facilities:

Table 2. Vinamilk business cycle from 2018-2021

Year 2018 2019 2020 2021

Total ending inventory (billion VND) 5,525.8 4,983.0 4,905.1 6,773.1

Number of days in inventory (day) 38,4 32,3 30,0 40,6

Number of days of debt (day) 32,8 30,6 31,9 35,0

Business cycle (days) 71,2 62,9 61,9 75,6

With the application of smart machinery systems in production, the warehouse

operation process is completely automated. This smart warehouse system was built by
Vinamilk based on the German smart warehouse model, with today's leading modern
technology. The warehouse temperature is always guaranteed to be correct for each
different product line. To ensure the quality of raw milk, production factories are
spread evenly across the country, next to livestock farms, with convenient
transportation conditions. Finished milk is also quickly transferred from manufacturers
to wholesalers and retailers across the country, from there to consumers. Therefore, the
business cycle is improving year by year.

Table 3. Impacts of facilities

Positive impacts

Creating products that are both effective in quality and

Satisfaction of
quantity that meets the needs of providing products to
customer needs
consumers

Advertising about Helping consumers trust brands and buy more products
products

Creating new and very effective production resources for

Production efficiency
businesses, helping to reduce product production time

Wide distribution of Easy to coordinate when there is a shortage of raw materials

factory system for production.
 Negative impacts

Products that contain many scientific and technological

elements often difficult to prolong their life cycle due to
Life cycle of product high demands from consumers, leading to technical
obsolescence of product lines on the market, reducing
customer satisfaction

If Vinamilk does not invest in a system of purchasing

stations, cold storage tanks, etc., fresh milk will spoil as
Production costs and soon as it is not stored within 3 hours after milking. To
other costs ensure product quality, Vinamilk is forced to invest heavily
in facilities, which consumes a lot of production costs,
repair costs for machinery and technology if damaged.
broken,....

Continuous change in Increasing production costs, causing the total product value
production to increase, possibly causing Vinamilk to lose market share.
technology and revenue decline

2.2. Inventory:

2.2.1. Analyze the situation of total inventory and total assets of

Vinamilk:

In Vinamilk's storage process, for powdered milk ingredients imported from

abroad, Vinamilk will reserve for a period of 2 to 3 months, while finished milk will
be stored for 20 days to ensure quality assurance. Because product demand in the
market continues to increase every year, in recent years, Vinamilk has invested in
expanding production, while building and upgrading more modern dairy factories.
Therefore, Vinamilk's milk production is increasing, leading to the company's reserve
output and inventory also increasing.

Table 4. Vinamilk's inventory output in the period 2018-2022

Year 2018 2019 2020 2021 2022

Inventory 4537 4983 4905 5.490 6.735

Total Assets 34.317 44.699 48.432 53.332 49.653

 Unit: Billion VND

Through the table above, it can be seen that Vinamilk's annual inventory value
accounts for a large proportion of the company's total assets. The value of reserved milk
output increased from 4,537 billion VND (2018) to 6,735 billion VND (2022), showing
that Vinamilk's supply to the milk market increased. From there, it shows that
Vinamilk's reserve management strategy is quite effective, helping to ensure stability in
milk supply to the market, while significantly minimizing risks due to unusual changes
in the milk supply market.

2.2.2. Classification of Vinamilk's inventory management:

a. Inventory management:

Vinamilk is applying the Economic Order Quantity (EOQ) model which helps
handle the ideal order quantity to minimize inventory costs.

However, as there are differences in material characteristics, packaging methods,

suppliers, order cycles, and waiting time from ordering to delivery, the optimal order
quantity cannot be totally matched with the EOQ model. It also depends on staff
experience in the production plan department.

b. Inventory organizing:

 Raw material:

Raw fresh milk, imported powdered milk, and spices are primary ingredients at
Vinamilk. The other materials must be stored at room temperature with natural
cooling. They will be organized and managed using the FIFO method (First In, First
Out) to maintain their quality.

With almost all materials, the materials that are stocked first will be used in the
production process first. Materials are stored on giant shelves 46 floors high. Heavy
items will be placed on the bottom, while materials with lower weight will be placed
on top.

Vinamilk applies codes/ barcodes and positionsaved markings in every shelf,

cell, and box in order to save a lot of time in the procedure of searching for materials
that are in stock or out of stock.
 Figure 30. Vinamilk's supply chain
 Finished products:

Apart from sorting by rows and shelves as in a material warehouse, the finished
product warehouse is split into four primary areas based on regional market demands,
such as pasteurized milk and yogurt. If the inventory exceeds its storage capacity,
Vinamilk will rent an outsource warehouse, separated for finished goods storage and
raw materials storage.

After goods are imported from the factory into the warehouse, the warehouse
keeper will classify them according to the product's preservation requirements to guide
the location on the shelves. Types of pasteurized fresh milk: lowsugar milk,
unsweetened milk, sweetened milk... will be put into the warehouse and usually
arranged on digitized shelves. Products that need refrigeration such as yogurt,
pasteurized milk, ice cream, cheese, butter... are transported immediately to cold
storage or frozen storage. This is a special product line that cannot be kept at room
temperature for a long time, so the transportation and loading/unloading work is
prioritized to focus resources so that the time is shortest.

Finished product warehouses are divided into two types of warehouses: regular
warehouses and cold storage
 Regular warehouse: occupies 80% of the warehouse area to store sterilized fresh
milk with many different flavors such as vanilla, strawberry, grape, chocolate, walnut,
macadamia... with different capacities to meet the needs of many customers. client .

 Packing :

Type 110ml x box of 4 1 box = 12 boxes x 4 1 liter = 1 box 1 box = 12 boxes

Type 180ml x box of 4 1 box = 12 boxes x 4 500ml = 1 box 1 carton = 12 boxes

 Cold storage:

Cold storage area is 2000m2, cold storage is divided into 5 small warehouses
inside to store products with different characteristics. Cool storage storage temperature
26°C: store yogurt, pasteurized milk, cheese Freezer storage temperature: 18°C to
25°C for butter products, ice cream Cool storage 20° Storage of raw materials for ice
cream and yogurt production Two 26°C cool warehouses containing flavors, raw
materials for ice cream and yogurt production (strawberry, durian, blueberry...), herbal
drinks ( Gotu kola, gac passion fruit...) It is mandatory that cold storage must always
maintain the above temperature level to ensure product quality. Security staff will
check around the warehouse every 2 hours to ensure the 51 temperature level is
properly maintained. In case of a power outage, a backup power generator is operated
in order to maintain the production procedure.

c. Inventory management in the ERP model:

There is a map in the ERP system which locates products, boxes, items, etc… It
could show an entire inventory report in the warehouse in realtime. Thus, the
production department could actively plan for manufacturing. The ERP system
supports inventory management with the following benefits:

 Simplifying Inventory Management Processes

 Quality Management
 Automatic Reporting
 Adjusting Products Accordingly
 Process Automation
 2.2.3. Impacts of inventory:

Table 5. Impacts of inventory

Positive impacts

The number of goods in the warehouse is large and diverse, so

Storage and
VNM also applies encryption technology to the products. It
transportation
helps store and ship efficiently

Digitization activities make it easier to prepare goods for

Goods inspection delivery to consumers while minimizing errors in goods
inspection.

Vinamilk's inventory management is very accurate and fast

thanks to ERP enterprise resource planning software. In
addition, using an ERP system will improve communication
ERP system
between factories, distribution centers, and partners, providing
an advantage in emergencies, and helping to reduce related
costs.

Negative impacts

Vinamilk only classifies raw materials, raw materials, and

Allocation of
finished products with the highest density, average density, or
investment
lowest density. Therefore, it will lead to ineffective allocation
resources to
of investment resources to inventory, such as items with large
inventory
quantities but low profitability.

Vinamilk's inventory is not reasonable. Although in general,

the ratio of inventory to total assets of Vinamilk is still at an
appropriate level for a manufacturing enterprise, however, the
inventory of each type of product has a clear difference. Some
Unreasonable
products have insufficient inventory to meet market demand,
amount of
the customer service department needs to reduce the quantity
inventory
sold to customers, enough to meet market demand for 710 days
such as sterilized fresh milk. Due to the output of fresh cow
milk purchased from farms, domestic cow farmers currently
only meet a small part, about 30% or more of market demand.
 2.3. Transportation:

2.3.1. Transportation decision:

Vinamilk utilizes two flexible transportation routes:

 Direct transportation from suppliers to demand points: After being purchased

and assessed for quality, raw fresh milk will be transported directly from the
dairy farm (supplier) to the production factory (demand point).
 Transportation from suppliers through intermediate consolidation points:
Finished milk is transported from the factory to the finished product warehouse,
then distributed to wholesalers and retailers.

Vinamilk transports raw materials, finished products, and more using various
modes of transportation, including road transport, sea transport, and air transport, from
both domestic and international suppliers.

Figure 31. Road transport of Vinamilk

The company's fresh sterilized milk products are lowcost but highdemand items.
Vinamilk employs a strategy of maintaining a moderate inventory close to customers
and then uses costeffective transportation methods to supplement inventory from
factories located in provinces with lower costs.
 2.3.2. Raw material, unfinished products transportation:

Vinamilk uses diverse types of transportation such as air, waterway, rail, and
road from domestic and foreign suppliers.

At livestock farms, raw cow milk after being milked is always quickly brought to
the cold storage system within one hour, then follows the pipe into the tank. The
quality of raw fresh milk is also tested similarly to farm raw milk.

Fresh milk from dairy farmers is quickly brought to the nearest milk hub.
Currently, Vinamilk has 86 milk hubs arranged according to dairy farming areas. Milk
hubs invest in facilities and preserve cold tanks. Milk hubs are responsible for
preserving and transporting milk in accordance with the regulations in the annual
contract with Vinamilk. At the milk hub, the factory's product quality inspection staff
will conduct analytical tests. These tests are performed regularly in each morning and
afternoon milk collection lane. Fresh milk that meets the requirements will be sampled
and put into a cold storage tank at the milk hub. Milk samples are coded with symbols
and sealed before being transferred to the factory's laboratory for analysis.

After raw fresh cow's milk is cooled to less than or equal to 4 degrees Celsius,
the milk will be received by specialized tank trucks to receive and transport to the
factory. milk hubs must send representatives to escort the vehicle to ensure absolute
safety in quantity and quality of milk during transportation. Tank trucks are inspected
periodically and unexpectedly, always ensuring conditions so that when transported to
the factory, the milk temperature is less than 6 degrees Celsius. When the vehicle
arrives at the factory, the factory's QA (Quality Assurance) staff Take samples,
conduct quality checks: boil for the representative of the milk hub to drink for sensory
perception.... Milk that is qualified to be received is weighed and pumped into the tank

Figure 32. Raw material, unfinished products transportation

 2.3.3. Finished products transportation:

Finished products after manufacturing are transported back to the 2 storages

located in Hochiminh and Hanoi city, 2 biggest cities in the South and North
respectively. They are safely stored and shipped under strict management to the
distribution channels and consumers. Vinamilk also uses various means of
transportation such as airways, maritime transport, railway, and highways to reach not
only domestic but also foreign customers.

2.3.4. Impacts of transportation:

Transportation has both significant positive and negative impacts on Vinamilk's

financial measures:

Table 6. Impacts of transportation

Positive Impacts

Inventory Holding Reducing lead times, lowering inventory holding costs and
Costs minimizing the need for excessive safety stock.

Customer Satisfaction Ensuring ontime deliveries and accurate orders, enhancing

and Retention customer satisfaction

Order Fill Rates Leading to higher order fill rates

Increased production volumes can lead to lower perunit

Economies of Scale transportation costs through optimized routes and larger
shipments

Market Expansion Entering new markets or expand coverage

 Negative Impacts

Transportation Reducing profit margins, making cost management crucial for

Costs profitability

Environmental Paying additional costs related to carbon emissions and

Costs ecofriendly transportation methods

Supply Chain Transportation disruptions can lead to increased costs,

Disruptions potential sales losses

Upgrading transportation infrastructure or investing in route

Capital
optimization technology requires significant capital
Investments
investments

2.4. Information:

2.4.1. Push versus pull:

Because Vinamilk uses both push and pull strategies, in each stage of the
strategy, Vinamilk is forced to use many different pieces of information to operate
effectively.

 For push strategy: the company needs information about production scale,
warehouse system, agent system, product reach, advertising strategy,... to be
able to predict, plan production and push goods to market.

 For pull strategy: the company needs to find factual information about areas
with high demand; warehouse and logistics system, wholesale and retail
agents,... near that area to be able to provide products to consumers quickly.

The information system at Vinamilk is designed based on the integration of ERP

management solutions, which integrates many different information technology
solutions such as: Microsoft's solomon software, Oreal's CRM customer management
solution and FPT's sales software. At the end of the day, all work results are
transferred to Vinamilk's server. This management method helps Vinamilk control
distributors' activities quickly and effectively. With unique codes set for each
distributor, Vinamilk can easily know which distributors sell effectively and even
which products they sell best.

In addition, Wamas Warehouse Management System integrated ERP

management system and Tetra Plant Master Automation solution provides integrated
operation of the plant from production planning, material input to the finished product
output.

The information system at Vinamilk is designed based on the integration of ERP

management solutions, which integrates many different information technology
solutions such as: Microsoft's solomon software, Oreal's CRM customer management
solution and FPT's sales software. At the end of the day, all work results are transferred
to Vinamilk's server. This management method helps Vinamilk control distributors'
activities quickly and effectively. With unique codes set for each distributor, Vinamilk
can easily know which distributors sell effectively and even which products they sell
best.

In addition, Wamas Warehouse Management System integrated ERP management

system and Tetra Plant Master Automation solution provides integrated operation of the
plant from production planning, material input to the finished product output.

2.4.2. Impacts of information:

Information significantly impacts Vinamilk's financial performance across

various aspects:

 Sales and Revenue: Market data, consumer insights, and competitor

information influence pricing, product development, and marketing strategies,
impacting sales and revenue.
 Cost Management: Data on raw materials, production, and logistics affect cost
structures. Effective datadriven cost management can enhance profitability and
gross profit margins.
 Inventory Management: Information on inventory levels and demand forecasts
optimizes inventory turnover, managing working capital efficiently.
  Cash Flow Management: Data on cash flow projections, accounts receivable,
and accounts payable helps manage cash effectively, improving metrics like
cash conversion cycle and liquidity ratios.
 Financial Planning and Budgeting: Accurate financial data is essential for
realistic budgets and forecasts, impacting budget variances and resource
allocation.
 Investment and Financing Decisions: Financial data informs decisions on
investments and financing options, affecting ROI and debttoequity ratios.
 Risk Management: Data on market risks, supply chain disruptions, and
regulations inform risk mitigation strategies, safeguarding financial stability and
creditworthiness.

2.5. Sourcing:

2.5.1. Key sourcing decision:

a. Dairy cows:

Vinamilk's cattle are directly imported from Australia, the United States, and
New Zealand. These are premium dairy cattle, globally renowned for their delicious
and full-flavored milk - Holstein Friesian (HF 100%). They are meticulously selected,
with a complete three-generation pedigree to ensure purity. This allows Vinamilk to
provide an abundant supply of top-quality milk to the world. The supply of HF dairy
cattle from renowned farms in Australia, the United States, and New Zealand has
helped improve Vinamilk's cattle's production capabilities, contributing to enhanced
product quality, output, and an increase in the number of dairy cattle. For example, in
early July 2022, Vinamilk received and introduced 1,550 purebred HF dairy cattle
directly imported from the United States to Vinamilk Green Farms in Thanh Hoa and
Quang Ngai.
 Figure 33. Vinamilk's Holstein Friesian (HF) cattle breed
Additionally, Vinamilk collaborates with domestic dairy farms to facilitate
domestic sourcing, strengthening its supply capacity both domestically and
internationally.

However, the continuously fluctuating global milk prices present challenges to

production and business operations. Simultaneously, heavy reliance on external cattle
sources can pose risks to the supply chain, potentially leading to shortages in the
availability of cattle. Therefore, investing in dairy cattle farms and actively sourcing
fresh milk locally is a crucial and long-term strategy for Vinamilk. To execute this
strategy, Vinamilk has taken practical actions.

Firstly, Vinamilk ensures that the imported cattle meet high-quality standards and
have a high likelihood of being pregnant to enable reproduction with the existing
domestic cattle population, increasing the number of locally sourced dairy cattle. The
entire cattle herd is directly selected from HF breeding farms in Australia, the United
States, and New Zealand by skilled, experienced experts. After the initial selection and
purchase from farms, the cattle are brought to quarantine facilities and undergo
specialized ultrasound examinations by veterinary experts to assess their reproductive
capabilities. Vinamilk's experts, in coordination with local experts, make the final
selection based on criteria such as appearance, health, pedigree, the production
capacity of the mother, and the genetic potential of the sire. Before arriving in
Vietnam, the cattle must undergo rigorous health checks and tests to ensure the quality
of the cattle supply.
 Figure 34. Transporting dairy cows to Vinamilk farm
Subsequently, Vinamilk actively invests in the care and breeding of dairy cattle
after their arrival to ensure long-term quality and the ability to sustain the nurturing of
dairy cattle in the future. Vinamilk has conducted practical research on the Vietnamese
environment to develop the most suitable breeding plans for imported cattle.
Additionally, the company has implemented new technologies, ensuring proper
feeding and care techniques, establishing dairy farms that meet international standards,
and training quality cattle care personnel.

b. Other ingredients:

Vinamilk always focuses on investing in and expanding its sources of raw

materials to proactively serve both domestic and international consumers. In line with
this strategy, Vinamilk has decided to collaborate with the Vietnam Sugar Joint Stock
Company in Khanh Hoa (Vinamilk's sugar supplier) to gradually integrate its supply
chain for its production needs.
 Figure 35. Vinamilk cooperates with Vietsugar
The Vietnam Sugar Joint Stock Company (Vietsugar) has always been a strong
support for tens of thousands of sugarcane farmers in the region. The company's main
products are refined sugar and natural brown sugar, directly processed from sugarcane
grown in the safe areas of Khanh Hoa province and neighboring regions. With
machinery and technology imported from developed countries in Europe and the
United States, the company's products are automatically packaged and include
complete information for quick and accurate traceability of production dates and
batches. Product quality indicators are analyzed and controlled at each stage of
production on the production line until they are stored. The company's refined sugar
product achieves high purity (Pol degree 99.9%) with a color removal technology
using ion-exchange resin, resulting in a pure white color naturally. Currently, the
company has a capacity of processing 10,000 tons of sugarcane per day and
independently refining 1,500 tons of raw sugar per day. In the near future, the
company plans to invest in expanding its capacity to 15,000 tons of sugarcane per day
and independently refining 2,000 tons of raw sugar per day.

With a reliable supply of quality sugar from the Vietnam Sugar Joint Stock
Company, Vinamilk can enhance the quality of its pasteurized fresh milk products
while creating an efficient domestic supply chain.
 c. Manufacturing activity:

Vinamilk manufactures dairy products in its own facility. This includes the
manufacture and processing of dairy products from dairy raw materials at Vinamilk's
factories and production facilities. Maintaining and strictly controlling the production
process to ensure product quality and compliance with food safety standards. Vinamilk
has been investing heavily in the construction of highquality factories.

d. Storage operations:

Vinamilk has invested in building and installing a system of cold storages to

preserve milk and dairy products company milk in order to bring products of
exceptional quality to consumers.

 Vinamilk has built the leading smart warehouse in Vietnam, with an area of
6000m2 with 20 entry and exit gates, 105 meters long, 35 meters high,
including 17 floors of racks with a capacity of 27168 lots. Import and export
goods automatically with 15 RGV (Rail guided vehicle) transporting finished
pallets to the warehouse and 08 Robot Crane (Stacker Crane) arranging pallets
into the shelf system.
 Vinamilk has established its own logistics enterprise in charge of transporting
goods in order for goods to reach customers quickly and conveniently in goods
management. Currently, Vinamilk has 2 main transportation units for the
company: HO CHI MINH CITY LOGISTICS ENTERPRISE and HANOI
LOGISTICS ENTERPRISE

To sum up, these two units specialize in delivering goods, such as raw materials
and finished goods, to functional units such as factories, wholesale agents, and product
introduction stores.

e. Cooperation with transportation partners::

In addition to its own transportation, Vinamilk can cooperate with outside

transportation partners to increase distribution capabilities and market access.To sum
up, using outsourced logistics units increases supply capacity and shares risks during
the transportation process, helping the company to serve many customer groups at the
same time when human resources are limited.
 f. Packaging:

Vinamilk has cooperated with two leading packaging suppliers in the world,
Tetra Pak company of Sweden and Combibloc of Germany to provide the best quality
packaging.

In this regard, Tetra Pak has officially established a manufacturing plant in

Vietnam with a total investment of 110 million USD on a 10-hectare area. The plant's
projected capacity is 20 billion packaging cartons per year, and it began operations in
2019. When in operation, the plant will facilitate faster delivery, reduce costs for
customers, and serve export goals. Tetra Pak no longer needs to import packaging
materials to Vietnam; instead, it sources them from the factory in Binh Duong. Tetra
Pak's construction of a manufacturing plant in Vietnam has enabled Vinamilk to reduce
its risks associated with heavy dependence on foreign supply sources. Now, Vinamilk
can proactively procure packaging materials within a short timeframe, save costs, and
minimize risks.

g. Machinery and equipment:

All Vinamilk products are manufactured on modern machinery and equipment

systems from Sweden, European G7 countries and are strictly controlled according to
the quality management system .ISO international certification by the world's leading
companies

h. Packing:

Product packaging is done entirely by robots at the factory headquarters.

Performing their own packaging at their factory can help them ensure that the
product is packaged safely and according to quality standards.

2.5.2. Impacts of sourcing:

Table 7. Impacts of sourcing

Positive Negative

Production Reduce costs and improve If there are production problems

activities product quality. Reduced such as machinery
dependence on thirdparty breakdown,Disruption of the raw
 Positive Negative

manufacturers and longterm material supply chain will disrupt

cost savings. the production process, affecting the
company's productivity and profits.

Invest in cold storageHelps If effective preservation is not

preserve milk and dairy carried out,it will cause damage,
Preservation
products, reducing waste and loss or waste of materials, products
activities
costs, increasing availability and inventory, increasing costs and
and revenue. reducing profits.

Reduce operating costs, Requires initial investment and staff

Smart storage costs, improves maintenance and training costs fit.
warehouse customer satisfaction and can
increase revenue.

Reduce shipping costs, If poorly managed, it will affect the

improve customer service and company's profits and performance,
Logistics increase VNM's revenue and inclShortage of raw materials,
profits. increased transportation and storage
costs.

Increase product packaging If packaging costs spike, this could

quality and customer have a possible negative impact on
trust,Helps increase brand profits. Packaging that does not
Packaging
awareness and product safety, meet quality or safety requirements
leading to higher revenue. can also waste resources and reduce
profits.

Increase product uniformity Technical problems, failures or

and quality,Reduce production ineffective equipment maintenance
costs and increase production can affect Vinamilk's production
Devices efficiency. Although there is performance., increasing repair or
an upfront cost, it will be replacement costs and reducing
offset by efficiency and profits.
product quality.

Milk Sourcing domestic and foreign Price fluctuations, weather, supply

ingredients raw materials affects the cost and demand and milk raw material
of goods sold (COGS). VNM supply can cause risks for Vinamilk
is try to localize milk if milk raw material prices increase
ingredients to reduce risks or there are large fluctuations.
 Positive Negative

from international sourcing.

Using automation of the The initial investment and operating

packaging process is costs of the robot can affect profits
possibleReduces labor costs of Vinamilk. Additionally, staff
Robotic and improves packaging training and management is required
packaging consistency. Despite the initial to work alongside robots, which can
investment in robots, it will also require additional resources and
help save costs in the long run costs.
and improve product quality.

2.6. Pricing:

2.6.1. Pricing decision:

When Vinamilk's products currently have high value positioned in the minds of
consumers, the product positioning is completely favorable. Therefore, Vinamilk often
sets high prices, in addition to trying to influence consumer psychology in the
interaction between price and quality.

Premium pricing strategy: The prices of these categories will be significantly

higher than competitors with similar products on the market.

So, Vinamilk only applies this method to some products in the highend segment.
Sometimes, overpricing a product can give the impression of higher quality or value
than usual. Therefore, this is a method that can be applied to help build a highclass and
prestigious brand image for Vinamilk.

For example, the brand's UHT fresh milk line has prices ranging from 30,000
VND/liter to 35,000 VND/liter. While similar products from TH True Milk or Dutch
Lady are usually only from 5,000 VND to 10,000 VND/liter. The distinct competitive
advantage compared to similar products is the absolute advantage in meeting the
majority of consumer needs in all places, all genders and all classes.

Competitive pricing strategy: compete with many strong competitors in the

powdered milk market, lowering product prices and creating more promotion
programs to attract customers.
 Discounting product prices and creating promotions can create stimulation for
ordering and shopping from customers. This can lead to a sudden increase in demand,
requiring more supply to ensure enough products are ready for delivery. Vinamilk
needs to monitor and manage inventory effectively to avoid shortages or excess
inventory.

Flexible pricing strategy: With this method, Vinamilk can change prices flexibly
depending on many different factors such as time, location, customer base,... To sum
up, flexible pricing strategy will help businesses offer reasonable prices and enhance
their competitive position in the market.

More specifically, Vinamilk's fresh milk products in Vietnam cost 15,000

VND/box but in Thailand it will cost 20,000 VND/box. However, this price is still
considered very reasonable in the Thai market when compared to other competitors in
the industry.

In short, If the selling price in Thailand is higher than the price in Vietnam,
Vinamilk may need to increase production or import more products to meet market
demand in Thailand. This may require adjustments in production and supply
processes, including determining the amount of product to be manufactured or
imported. And to ensure enough products are ready for delivery, Vinamilk may need
to adjust inventory management in Thailand.

2.6.2. Impacts of pricing:

Table 8. Impacts of pricing

Positive Negative

Premium Increase sales and revenue,helps Pricing the product too high
pricing create an impression of higher compared to competitors can lead
strategy quality and value. This helps to loss of customers and reduced
Vinamilk achieve higher sales sales. Customers can choose
and revenue from these products. cheaper products,and can reduce
 consumption and revenue of
Vinamilk.

Strengthen competitive position Vinamilkmay have to reduce

Competitive and attract customers, profits to compete on price. This
pricing contributing significantly to the can affect the company's financial
strategy company's revenue and profit performance and profitability.
growth.

The company has the ability to requires good analysis and

adjust prices according to each strategic decisions to ensure a
market segment andMeet diverse balance between price and profit.
Flexible
needs, from highincome If Vinamilk does not manage
pricing
customers to customers who are prices carefully,There may be an
strategy
more price sensitive. This can imbalance between revenue and
increase revenue and expand costs, affecting the company's
potential markets. profits.

IV. Conclusion:

1. Problems of the milk supply chain:

The demand for fresh milk consumption in the Vietnamese market is increasing,
in 2015 this number reached 23 liters/person/year, while in 2010 it reached 12
liters/person/year, within 5 years, milk consumption has doubled and is forecast to
increase 9%/year for the next years and currently this number has reached 26-27
liters/person/year. Besides quantity, domestic consumers are increasingly concerned
about the origin of pasteurized fresh milk products and the quality of milk raw
materials. Increasing the quantity and quality of dairy products requires the ability to
meet demand and the process of controlling raw material areas to be increasingly
improved.

The process of controlling raw material areas has become a vital issue for
Vinamilk. Not only is it difficult in the process of selecting cow breeds and raising
animals to achieve the required quantity of milk, but also managing the quality of
output until it is brought to fruition. The manufacturing plant must also be given close
attention and control. However, to properly implement the process of controlling raw
material areas requires ensuring advanced and consistent farming techniques in the
raw fresh milk production system, from importing dairy breeds to breeding techniques.
applied at households, and finally the stage of preserving and transporting fresh milk
to the Vinamilk factory. In each stage, this system is always affected by objective
factors such as soil, climate, water source... in addition to subjective factors in terms of
agricultural technology and temperature control process. during transit, or the distance
from the farm to the factory. These are two issues that will have a strong and profound
impact on the supply chain of internal pasteurized fresh milk products, as well as
Vinamilk's market competitiveness.

1.1. Productivity for milk:

To ensure milk productivity, the requirements for imported cow breeds for milk
production purposes are the top factors that need to be considered. Importing cow
breeds from abroad will lead to certain difficulties in terms of cost and transportation.
In addition, cow breeds that are highly adaptable to living conditions on Vietnamese
farms must be selected. The difficulties do not stop there, the import of dairy cows
shows that Vietnam depends on world raw material sources (Australia, America, New
Zealand) affecting sustainable development for Vinamilk. Therefore, regarding the
issue of input materials, Vinamilk has been looking for long-term measures to reduce
the cost of importing dairy cows and cross-breeding dairy cows to increase milk output
and productivity.

The process of applying appropriate techniques to the requirements of livestock

scale and livestock standards still has many limitations. In 2015, 50% of raw fresh
milk was purchased from households, however lack of technology and knowledge led
to low milk productivity (Vinamilk). Currently, milk raw materials are mainly
purchased from 6,000 farming households with more than 130,000 dairy cows,
however each dairy farming household only operates on a small scale (only 7-10
cows). Therefore, farmers do not have enough capital to ensure facilities for their dairy
farming.

1.2. Milk quality control:

The source of raw milk depends mainly on livestock farmers, which has led to
inconsistent output and insufficient storage facilities (during and after purchase).
Furthermore, the process and method of raising livestock is the poorest activity in the
value chain because livestock farming households face many difficulties such as initial
investment capital (the average price of dairy cows is up to 14 million VND/cow). ),
choosing the right breed of cow is very difficult and time-consuming, the breeding
process requires a certain amount of knowledge or designing a "housing" for cows will
also directly impact the quality of breeding. And once the dairy barn does not meet the
standard conditions, it will cause the cows to be stressed as well as suffer from many
diseases, leading to the spread of disease to the entire herd of cows. This causes cows
to stop eating, become skinny, weak, and the quality and productivity of milk
production also decline day by day.

Milk transshipment is an important activity, playing an indispensable role in the

production process of sterilized fresh milk products. This activity needs to be strictly
controlled to certain transportation principles such as temperature control (4-6 °C),
planning the distance between the collection place and the production plant, and fresh
milk collection time. , transfer vehicles, storage tanks and stability during transfer.
However, controlling the flow of raw milk is quite complicated and requires high
accuracy in information flow, due to high storage requirements and the need for
specialized tanks compared to conventional goods. Since then, costs for control have
increased, technology for the preservation process also requires continuous
improvement and maintenance activities must take place according to planned needs.

2. Solution:

In order to well manage the quality of input milk sources in Vietnam, Vinamilk
has the following improvements and management:

2.1. Before purchasing milk ingredients:

Vinamilk is constantly developing its farm system, investing in building

international quality fresh milk raw material sources for Vietnamese consumers.
Instead of concentrating in one place for easy management, Vinamilk chose to build a
farm system in a chain of 13 factories across the country, to reduce the time it takes to
transport fresh milk ingredients to the production site, ensuring ensure the best quality
milk for consumers.

 For cooperative livestock households:

 Before concluding the Purchasing Contract, Vinamilk conducts an actual survey
and evaluates the raising conditions, cage hygiene, environment, and full vaccination
of Livestock Households.

 Standard farm system:

October 26, 2018: Vinamilk was recognized as the company owning "Asia's
largest Global G.A.P farm system".

June 2018: Vinamilk is the first dairy company in Vietnam to invest in importing
nearly 200 purebred A2 dairy cows from New Zealand, a country with the world's
leading livestock farming and milk production industry.

2.2. While purchasing milk ingredients:

To ensure consumer health, fresh milk ingredients Vinamilk purchases from

farmers across the country are always strictly inspected according to the correct
process.

 Stations and transportation:

2016: Raw Material Area Development Block completed the program to upgrade
and modernize milk purchasing stations, comply with strict requirements on hygiene
and food safety, and build new milk stations according to Modern model, closed
process, meeting the needs of farmers to expand livestock production.

2017: Cu Chi Raw Fresh Milk Center was established, which is the gathering
place for all fresh milk sources in the city area. HCM and surrounding areas, after
quality control, will be coordinated to all factories in the city and Binh Duong areas.

2018: Cu Chi Raw Fresh Milk Center achieved ISO 9001:2015 certification

 Quality verification:

International quality management systems such as ISO 9001:2015, Global G.AP

and Organic.

Strict inspection process: At the transfer station, the factory's product quality
inspection staff will conduct tests to analyze precipitation, taste and smell,
microbiological criteria... 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.

2.3. After purchasing milk ingredients:

Quality inspection before being brought into the factory: After raw fresh cow's
milk has been cooled to less than or equal to 4 degrees Celsius, the milk will be
received by specialized tank trucks to receive and transport to the factory. . Specialized
tank trucks must be inspected periodically and unexpectedly, always ensuring
conditions so that when transporting milk to the factory, the milk temperature is less
than 6 degrees Celsius. When the vehicle arrives at the factory, factory staff take
samples. , conduct quality checks.

3. Lesson learned:

Lesson 1: Recognizing product quality is the top investment. Vinamilk is a large

enterprise producing and trading milk and dairy products in Vietnam with many
product lines on the market such as : powdered milk, nutritional powder, fresh milk,
yogurt, condensed milk, ice cream, cheese... At the Vinamilk dairy farm system spread
across Vietnam, cows are cared for in a natural environment with the process " Strict 3
NO's: no use of growth hormones, no antibiotic residues, no pesticides and no
preservatives. Along with a system of international standard factories spread
throughout Vietnam, fresh dairy products Vinamilk is always 100% guaranteed a
source of fresh raw milk from farms that is quickly transported to factories. processing
machine, ensuring optimal preservation of delicious taste and nutrients from milk in
products. In the past two years, Vinamilk continued to grow in double digits and
increase market share, affirming Vinamilk's number one position in the dairy industry,
enhancing reputation and trust in quality with consumers. Constantly striving to apply
the world's leading technologies and standards, improving product quality, Vinamilk
was voted by Forbes Vietnam magazine as the most valuable brand in Vietnam. The
company's reputation as well as product quality were once again affirmed when
Vinamilk 100% fresh milk products were certified by Nielsen as the leading brand in
the fresh milk segment.

Lesson 2: Always identify the supply chain as one of the competitive advantages
of the business. The fundamental factor to compete today in leading companies is to
have a supply chain that outperforms competitors. In other words, supply chain
management is no longer an operational function of leading companies but becomes a
strategic part of the company. In the case of Vinamilk, the company has identified,
built and developed its supply chain into a competitive advantage. Vinamilk has
established a deep and wide distribution system, considering it the backbone of its
long-term business strategy. Currently, with over 180 distributors and more than
80,000 retail points nationwide, Vinamilk has been able to reduce the time from
receiving orders until delivering the final product to retailers. This also helps
streamline the supply chain and quickly respond to customer needs. Therefore, even in
the context of over 40 operating businesses, hundreds of milk brands of all kinds,
including many multinational corporations, competing fiercely, Vinamilk still stands
firm and affirms its leading position. in the Vietnamese milk market.

Lesson 3: Invest and build a new information system to support the supply chain.
Vinamilk boldly invests in restructuring the information system, which is the "rib" of
the supply chain. Investing in building information systems makes production and
distribution faster and more efficient. Ensure information arrives fastest, most
accurate, clearest, easiest to understand, effectively serving the production and
business process. Currently, Vinamilk has been using three international ERP solutions
from Oracle, SAP and Microsoft simultaneously. Thanks to these IT applications,
Vinamilk has more effectively managed its distribution channels. And this is also a
Vietnamese food business that has a management system built with maximum
comprehensiveness and synchronization. The use of online sales management software
is considered one of the solutions to improve customer service quality, improve
management efficiency, corporate governance and contribute to bringing Vinamilk to
the top 50 companies. biggest milk.

Lesson 4: Enhance collaboration with supply chain partners. Currently, Vinamilk

products dominate the majority of the market share nationwide, distributed evenly
throughout 63 provinces and cities with 240,000 sales points. With such a large
network, ensuring seamlessness and cohesion from suppliers to retailers is inevitable.
Therefore, Vinamilk has identified collaboration as a very important factor.
Specifically, building long-term and sustainable development goals for large domestic
and foreign suppliers is the main goal, identifying dairy farms as extremely important
strategic partners in supplying dairy products. providing consumers with top-quality
products. For example, to build a connection between factories and farms, Vinamilk
not only supports prices and stability in purchasing but also breeds and techniques,...

Lesson 5: Perform good product management and preservation to enhance brand

image and social responsibility. Vinamilk applies a closed, strict preservation process,
with each type of product and each stage having appropriate temperature and time
requirements. For example, raw milk after being harvested or purchased from people
will be immediately transferred to a filter tank, an intermediate tank, and then put into
a cold tank at 40C. At processing plants, pasteurized fresh milk is processed at high
temperatures (140 - 143 degrees Celsius) for 3 - 4 seconds, while pasteurized fresh
milk is processed more complicatedly but at lower temperatures. 75 degrees Celsius,
for about 30 seconds, then quickly cooled to 4 degrees Celsius.
 REFERENCES

[1] [Online]. Available: https://sbiz.vn/blog/case-study-5/case-study-mo-hinh-quan-

ly-kho-thong-minh-au-tien-va-lon-nhat-tai-viet-nam-cua-vinamilk-94.
[2] [Online]. Available:
https://www.researchgate.net/publication/352705771_Quan_tri_chuoi_cung_ung.
[3] [Online]. Available: https://www.vinamilk.com.vn/en.
[4] [Online]. Available: https://www.vinamilk.com.vn/vi/goc-khach-hang.
[5] [Online]. Available: https://giacmosuaviet.com.vn/pages/chinh-sach-giao-hang .
[6] [Online]. Available: https://giacmosuaviet.com.vn/pages/quy-che-quan-ly-hoat-
dong.
[7] [Online]. Available: https://finance.vietstock.vn/VNM/tai-chinh.htm?tab=CSTC.
[8] [Online]. Available: https://asia.nikkei.com/Companies/Vietnam-Dairy-Products-
Corp.
[9] [Online]. Available: https://www.vinamilk.com.vn/en/development-strategy.
[10] [Online]. Available: https://www.vinamilk.com.vn/en/corporate-governance.
[11] [Online]. Available: https://www.vinamilk.com.vn/en/annual-reports.
[12] [Online]. Available: https://en.nhandan.vn/vinamilk-sixth-most-valuable-dairy-
brand-in-the-world-post119682.html.
[13] [Online]. Available: https://als.com.vn/tim-hieu-ve-chuoi-cung-ung-cua-vinamilk.
[14] [Online]. Available: https://vilas.edu.vn/chuoi-cung-ung-cua-vinamilk-sce.html.
[15] [Online]. Available:
https://www.vinamilk.com.vn/en/improvement-innovation/new-production-
technologies.
[16] [Online]. Available: https://www.vinamilk.com.vn/vi/don-vi-thanh-vien.
[17] [Online]. Available:
https://www.vinamilk.com.vn/vi/tin-tuc-su-kien/955/vinamilk-sua-tuoi-ngon-
trong-bao-bi-chuan-quoc-te.
[18] [Online]. Available: https://egoexpress.vn/chuoi-cung-ung-cua-vinamilk/.