Operation

Management
OMO WASHING POWDER – UNILEVER VIETNAM

Prepared by Sang Bui – INTT 1A

INSTRUCTOR’S NAME: LINDA BUTTERFIELD |
DATE: DECEMBER 9, 2020
Operation Management – OPMT 1103

Table of Contents
EXECUTIVE SUMMARY...................................................................................................................2
I. Strategy............................................................................................................................................3
1. Mission............................................................................................................................................3
2. Competition.....................................................................................................................................4
II. Processes.........................................................................................................................................5
1. Product Design................................................................................................................................5
2. Forecasting......................................................................................................................................6
3. Service design..................................................................................................................................6
III. Technology..................................................................................................................................6
IV. Quality.........................................................................................................................................7
1. Strategy............................................................................................................................................7
2. The cost of quality...........................................................................................................................7
3. Improvement processes...................................................................................................................8
V. Supply chain....................................................................................................................................8
1. Stock and Supply.............................................................................................................................8
2. Distribution......................................................................................................................................9
VI. Globalization.............................................................................................................................10
1. Trade agreement............................................................................................................................10
2. Duties............................................................................................................................................10
VII. Lean, Theory of Constraints......................................................................................................10
VIII. Conclusion.................................................................................................................................10
References............................................................................................................................................12

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Operation Management – OPMT 1103

EXECUTIVE SUMMARY
In recent year, the competition of Vietnamese companies and foreign companies was
drastic, especially multinational firms, which present and dominant in Vietnam. Among them,
the one that should be mentioned is Unilever. “Unilever is one of the world’s leading
multinational companies specializing in food, home, personal care products. Unilever is now
operating in over 150 countries and territories in the world. Its commitment is to improve quality
of life for people around the world through its high-quality products & services. Started its
operation in Vietnam in 1995, Unilever has invested more than US$300 million in Vietnam with
a modern manufacture site in Cu Chi Industrial Zone. Through an extensive network of 150
distributors & 200.000 retailers, Unilever creates 1.500 direct jobs and 10.000 indirect jobs who
work in its third parties, suppliers and distributors”[CITATION Uni20 \l 1033 ]. Unilever became one
of the most successful investors in our country with two fields which are specializing in personal
care and household products (such as Lux, Viso, Soap, Lifebuoy, Dove, etc…). For those
products of this company, I choose Omo washing powder, which is a leading brand of Vietnam
washing-powder, to examine and analyze.
This report aims to analysis the company’s operations to demonstrate the concepts learned in
operation managements. In the first part called Structure, I will identify the core competency of
company and indicate who is company’s competitors. It means that we will identify the
company’s mission as well as the objectives that will guide the present and future development
of the company. Second, there will be an operations processes analysis to discuss the facilities,
capacity strategies, product design, forecasting and inventory management of company. Next, I
will assess technology used in company operations to create new products meeting customer’s
demands. In the quality strategy, I will analysis the costs of quality and discuss the process
improvement processes. After that, I go on with supply chain to explain the sourcing to delivery,
supply chain management and the distribution strategy. I will cover all distribution channels of
Omo Vietnam. Besides, I will analysis company’s trade agreements, duties for globalization such
as “Labour Rights in Vietnam” which help employee rights, especially helping poor people and
activities to help improve social life. Last but not least, we research about Lean, Theory of
Constraints, Total Quality Management to know how the company could use the concepts to
improve operations. In the end of the report, I summarize all the key points in the reports and
give some directions to develop company in the future.

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Operation Management – OPMT 1103

I. Strategy
1. Mission
Mission Statement Attracting and building long lasting relationship with customers through
effective communication is what the OMO product has been doing. It brings the wealth of
knowledge and international expertise to the service of local consumers. Its mission is to add
continuously vitality to the quality of life of consumers. OMO meets every day needs for hygiene
and personal care with brands that help people feel good, look good and get more out of life.
Along with the development of country, the development of children is the first priority
concern of society in general and of each family in particular. According to this trend, Omo has
chosen their first strategy which is aimed at children under slogan “Dirt is good” [ CITATION
Dir20 \l 1033 ]. This message spread not only in Vietnam but also all countries Unilever located.
In fact, the core of Omo brand is going consistently through all brand activities and innovations.
To apply these campaigns, this company uses advertising strategy “boomed” on television,
newspaper and Internet. In addition, they also make them more excited by associating with a
series of marketing activities to promote the brand such as “Herb garden,” “Sensory garden,”
“Water play”, etc.[ CITATION Dir20 \l 1033 ]. The second strategy is under slogan "Every child has
a right". “Unilever created the campaign "Every child has the right", which focuses on giving
children the freedom to experience, learn and develop. In order to ensure that households
everywhere benefit from this initiative, we invest heavily in research and development to
produce a product line that is tailored to the income of different audiences.” [CITATION
OMOVietnam \l 1033 ]. Also key to the Omo brand is our commitment to the “Cleaner Planet
Plan”, which is not only in Vietnam but also all countries. They said, “The Cleaner Planet Plan is
about bringing you products that are not only great at cleaning but also leave a lighter footprint
on the planet. We’re also concentrating our liquids and powders, saving both energy and
packaging. In fact, our Small & Mighty liquid bottles for Persil require 40% less packaging than
a standard bottle of detergent.” [CITATION OMOVietnam \l 1033 ] and [ CITATION OMOGlobal \l
1033 ]

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Operation Management – OPMT 1103

Source: [ CITATION Uni1 \l 1033 ]

2. Competition.
In the term of competition, there are some competitors with Omo, but Omo is the most
common used product nationwide. “Vietnamese washing powder market used to be the
competition of Unilever and P&G for a long time. Since 2012, the new entrance of some
domestic products did change the situation which made the market became more active.
However, currently Omo from Unilever is still the dominant which overwhelm other competitors
for the brand experience with 83% people said that they have used this product at least once.
Other brands from Unilever such as Surf, Viso also play good roles in wining consumers’
experiences. P&G with Tide and Ariel are placing at the 2nd and 3rd in the ranking”[ CITATION
Vietnamese20 \l 1033 ]. We can see the competition in detail as following chart:

Source: [ CITATION Vietnamese20 \l 1033 ]

I believe that Omo will develop more and more sustainably in the market. Besides, this
company will provide the best quality product in the market, which brings product closer to
the public by means of brand positioning. These message for community is company’s core
competency what the firm does better than any other brands.

II. Processes.

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Operation Management – OPMT 1103

1. Product Design
- Characteristics: OMO is a product with high quality in comparison with other kinds of
washing powders; it can dislodge completely any dirty spots on the clothes.

- Brand name: OMO is the short name which is easy to remember and pronounce.
- Packaging: Packaging is considered as a silent salesperson, and the most outstanding
feature about packaging of OMO products is that it is very vivid, colorful, fresh, friendly,
striking and very eye-catching. OMO's traditional colors are red, white, and blue.
Packaging is always improved to create the highest aesthetics to consumers and ensure
the product quality.
- Size: To meet consumers demand, there are many kinds of OMO products with many
sizes: 400g, 800g, 1. 5kg, 3kg, 4kg, 5kg and 9kg.

- Types of product: During development period, OMO always gives new products to meet
the new demand as soon as possible. There are two main types: OMO laundry liquid
detergents and OMO laundry powder detergents. These types is divided into many
different uses as following:
 OMO Laundry Liquid Detergents
 OMO F&T Liquid
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Operation Management – OPMT 1103

 OMO Sensitive F&T Liquid

 OMO Ultimate F&T Liquid
 OMO Ultimate Sensitive F&T Liquid
 OMO Touch of Comfort Inspired Freshness F&T liquid
 OMO Expert Colours and Darks
 OMO Expert Odour Eliminator
 OMO Laundry Powder Detergents
 OMO Powder - Active Clean and Touch of Comfort
 OMO Sensitive Powder
 OMO Ultimate Powder Capacity
[ CITATION Uni202 \l 1033 ]

2. Forecasting
OMO uses the penetration price strategy. In the first 5 years since the introduction, the
company maintained OMO price and quality in the face of rises in raw materials and fuel price.
These measures helped OMO gradually gain market share and increase the price later.
Calculations show that from 2002 up to date, OMO washing powder prices have increased by
about 10,000 VND/ kg. [ CITATION ACa20 \l 1033 ]

3. Service design.
The understanding of competitors is important but the understanding of customers is
definitely necessary for the growth and survival of a company. In order to meet customer’s needs
and wants, Omo uses target marketing because it helps sellers to find their marketing
opportunities more efficiently. Based on target marketing, sellers can develop the right product
for each target market and adjust their prices, distribution channels and advertising to reach the
target market efficiently (Kotler et al, 2006). Therefore, they summarize for customer segments
of Omo and their characteristic that following variables as segmentation criteria.

III. Technology.
With the development of modern life, every company tries their best to apply the newest
technology to produce new products. To ensure their innovations are exciting, safe and
competitive, they invest heavily in three strategic capabilities[ CITATION Wor20 \l 1033 ]:
 SEAC.
The aim of this innovation is “We want consumers to use and enjoy our products with
confidence. Our scientists at Unilever’s Safety and Environmental Assurance Centre
(SEAC) use their expertise and industry partnerships to build safety and sustainability
into every product innovation.” [ CITATION Wor20 \l 1033 ].
 The second technology called “Regulatory Affairs”.

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Operation Management – OPMT 1103

In this innovation, they believe “Our Regulatory Affairs business partners use leading-
edge approaches in compliance, advocacy and partnerships to bring innovative and
sustainable products to life, faster.” [ CITATION Wor20 \l 1033 ].
 And the last one is called “Digital R&D”.
In recent years, Unilever has invested much in R&D to have modern production lines
and new technology which help reduce costs and add more features to their products.
“More than 5,000 Unilever R&D professionals are building our brands through
innovation. We invest around €1 billion in R&D each year, and we hold a portfolio of
more than 20,000 patents and patent applications”[ CITATION Inn20 \l 1033 ]. “Many of the
digital advances our world is experiencing are influencing new consumer trends and
rapidly evolving consumer expectations. Through Digital R&D, we are exploring
opportunities to drive innovation and product superiority and stay connected with our
consumers in a meaningful way.”[ CITATION Wor20 \l 1033 ]
In particular, the emphasis on investment in R&D technology development of Unilever has
created beneficial conditions for the development of OMO. There are many outstanding
innovations for the products of OMO, namely:
 In 2003, Omo is the first brand to provide detergent for machine wash. Until now, OMO
Matic has been recommended by 80% of washing machine manufacturers in Vietnam.
 In 2004 Omo launched break - through formulation which cleans dirt even in hard-to-
reach places.
 In 2004, OMO launched Omo Bleach, which delivers safe bleach laundry.
 In 2007, OMO Comfort with long lasting fragrant is introduced to consumers.
 In 2009, with new enzyme formulation and super soaking technology, OMO can remove
tougher stains more efficiently than ever before. OMO is now known to Vietnamese
people as stain – removal expert
[ CITATION Uni201 \l 1033 ]

All these above innovations have extremely positive impacts on the development of OMO,
helping manufacturing a wide range of new products, creating market opportunities; hence,
OMO not only to enhance its quality but also to reach target consumers easier.

IV. Quality.
1. Strategy
I tell strategy more details in part I, but the main strategy of OMO is to focus on health of
public and to add continuously vitality to the quality of life of consumers.

2. The cost of quality

The costs of a generally quality management program in Unilever is quite a serious activity
conducted by the management. The company uses IMB cost management and control software
towards determination of how cost can be reduced and management in each activity of

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Operation Management – OPMT 1103

production. Proper cost analysis and monitoring of activities within the production process is
quite a serious affair for the organization. Through management and cost control, Unilever has
been able to produce goods and services keeping cost attached to the products quite low and
affordable in the world.[ CITATION JOB \l 1033 ]
OMO Vietnam has set a target to minimize production costs in order to bring reasonable
prices to both consumers who have high and low income. Company has relied on small business
in local to find alternative materials in place for import materials. This decrease both the
purchasing cost and tax rate. Omo has been using product line pricing strategy which is when
management must decide on the price steps to set between the various products in a line, based
on cost differences between the products, customer evaluations of different features and
competitors’ prices. Omo matic, Omo comfort and Omo in liquid form are typical examples for
various versions and different features.

3. Improvement processes.
Unilever give more training and support for distributors in comparison to distributors of other
FMCG companies. The training activities are highly appreciated by distributors because they
promote the development of the company and the distribution network. UVN provides its
distributors with several managerial software packages for storekeepers, salesmen/women
(SOLOMON), accountants and managers. To support in the mastery of these software, UVN
provides technical training activities to its distributors. A majority of distributors acknowledge
that the performance of the company is more professional and systematic, and more importantly,
the time taken for cross-checking is significantly reduced after using the software.[ CITATION
ACa20 \l 1033 ]

V. Supply chain
1. Stock and Supply.
All distributors surveyed maintained that the products received from UVN were that they
requested, and were provided on schedule. On a weekly and monthly basis, distributors prepare
orders and send them to UVN through a computerized system, which is called “automatic”
orders. However, some distributors complained that they received products that had not been
ordered through UVN’s “allocation” mechanism without prior notice. This creates an excess of
stock in the distributor’s warehouse and sometimes causes difficulties in cash flow management
for distributors if they cannot sell or return the products to UVN.
Taking this problem into account, UVN has a policy of returning the product. However,
UVN has not experienced this problem very often since its establishment. For sub-standard
products returned by the customer, UVN will replace them or return the money to the customers.
For products that were damaged during transportation and storage, UVN has a mechanism in
place to compensate its distributors. Regarding damaged products, UVN has an agreement with
its transport agencies. If there is any problem during transportation, UVN’s transport agencies
will take full responsibility and compensate for any damages.[ CITATION ACa20 \l 1033 ]

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Operation Management – OPMT 1103

2. Distribution
UVN (Unilever Vietnam) distributes its products using two types of trade channels:
general trade and modern trade. General trade is referred to as retail channels comprised of
distributors (small enterprises), sub-distributors (big shops, medium and small supermarkets) and
small retail shops. Modern trade includes wholesale and big supermarkets such as Metro, Big C,
and Saigon Coop Mart. UVN’s products are delivered by distribution companies to sub-
distributors or supermarkets, (i.e., retailers) and then to the end-users throughout the Country.
Regardless of the transportation costs, consumers around the Country pay the same price which
is printed on the product label[ CITATION ACa20 \l 1033 ]. Therefore, as many others products in
Unilever, Omo is divided into 2 channels in details as following:
 Manufactures -> Retailer -> Consumers.
Vietnam has 63 million people living in rural, accounting for 65.6 % (2019); retail
market is very complexity and the majority with more than 450,000 stores. On the other
hand, based on the buying habits of customers, company choose distribution channel
through agents, supermarkets or distributors suitably. Vietnamese has the buying habit
everyday instead of going to supermarket at the weekend to buy goods for the whole
week. Unilever takes advantages of available channels as the market system, traders.
Since the general trend of Vietnamese today is increasingly closer to modern distribution
channels such as supermarkets, company has implemented a strategy that distributes its
product through retail supermarket such as Big C, Co-op mart, Maximax system, etc...
Those supermarkets distribute directly product to the final clients by giving them to
choose favorite and fit product. Distribution is focused the final user, consumed in small
amounts but regularly.
 Manufacturer -> Wholesaler -> Jobber -> Retailer -> Consumer.
Accomplished products are taken to the agents representing the company to conduct
transactions with customers. Distribution center is located in Binh Duong with modern
equipment and scientific operating layout. Goods after production will be gathered on
this center, then shipped to dealers in Central (from Nha Trang southwards) and
Southern, Western. This is also a transit point from HCMC to Ha Noi and Da Nang. So,
distribution strategy is to expand the market, agents, increase the quantity and quality of
channel distribution, but it creates more cost and the price of Omo will be higher in hand
of customers.
Among 2 channels, channel 1 is the most effective since it has only one intermediary and save
more for transportation cost. If producers want provide Omo with the lowest price for customers
as possible, they should cut down the number of intermediaries.

VI. Globalization.
1. Trade agreement.

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Operation Management – OPMT 1103

Global and local partnerships with other stakeholders who share their commitment to
driving transformational change are a vital part of their business model. They have been working
with Oxfam on tackling poverty and inequality across the world for many years now, with a clear
focus on two key pillars – enhancing livelihoods and health and well-being. Together, they have
impacted millions of lives through improved access to safe and affordable water, training for
better agricultural practices and nutrition intervention programmers. In Vietnam specifically,
Oxfam noted improvements in the management approach which has increased levels of trust
between workers and managers and the significant efforts made to improve the effectiveness of
grievance mechanisms. A higher proportion of workers are directly employed, reducing the ratio
of contract labour to permanent employees. Suppliers were also found to be more aware of
Unilever’s expectations on labour standards and have received guidance on the Responsible
Sourcing Policy. At key suppliers, hours worked beyond the legal minimum and excessive use of
contract labour are issues that have also been tackled[ CITATION Lab \l 1033 ].

2. Duties
Tax, particularly international tax, is a key issue for Unilever OMO , their stakeholders and
other interested parties. The tax they pay is an important part of our wider economic and social
impact and plays a key role in the development of the countries where they operate. “We regard
it as a critical element of our commitment to grow in a sustainable, responsible and socially
inclusive way. Also, Corporate income tax is payable on the profits made by the companies in
the Unilever Group. Profits are calculated after deducting business expenses and legislated tax
reliefs - such as depreciation on equipment and R&D incentives - as provided by the tax laws in
the countries where we operate. We aim to pay the right amount of tax at the right time, on the
profits we make, and in the countries where we create the value that generates those
profits.”[ CITATION Uni \l 1033 ]

VII. Lean, Theory of Constraints.

Water is critical for the planet, its ecosystems and its inhabitants to survive and thrive. At a
human level, it is essential for life, and at an economic level, it is a central fuel for the global
economy. Unilever is no different. Water is critical for the manufacturing and use of our
products. Constraints on the quality and quantity of the water available limit their ability to
operate effectively and meet the needs of our consumers. Through the Unilever Sustainable
Living Plan (USLP), they are responding directly to a number of macro forces. A number of our
USLP targets directly address the risks and opportunities in our markets, including water scarcity
that’s caused by climate change. This is constraints of the general development of Unilever.
[ CITATION Uni2 \l 1033 ]

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Operation Management – OPMT 1103

VIII. Conclusion.
In conclusion, OMO has got a large market share in Vietnam detergent market and at this
time, OMO is the leader detergent with good quality, friendly image, and impressive promotion
programs. However, to prepare the best for the unpredicted future, Omo has to pay attention and
predict to changes in behavior of external environment, strengths and weaknesses of its
competitors to improve operation management properly, especially Tide and the needs and wants
of customers, hence, taking proactive approach. They should spend more concern about
positioning their brand through develop strategies for product, cost, quality, supply chain and
globalization. Besides, the Unilever detergent has entered the process of maturing, which signals
the requirements to have more innovations with the view to upgrading quality and decreasing
cost. In the context of more domestic and foreign competitors emerging in Vietnam, not to
mention the inflation rate which has not completely decreased, the long-term relationship with
customers is much more emphasized in OMO strategies. Being a daily household product, the
long-term relationship with customers definitely will enhances and prolongs OMO sales and
profits. Last but not least, more promotions and continuingly updated commercial ads to catch up
with customers’ expectations and market trend will be a deciding factor for OMO future
development.

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REFERENCES
1. [ CITATION ACa20 \l 1033 ]
https://www.unilever.com/Images/sd-exploring-the-links-between-international-businesses-
and-socio-economic-developmen-of-vietnam-a-case-study-of-unilever-vietnam-2009_tcm244-
409773_en.pdf
2. [ CITATION Dir20 \l 1033 ]
https://www.omo.com/au/dirt-is-good.html
3. [ CITATION Inn20 \l 1033 ]
https://www.unilever.com/about/innovation/innovation-in-unilever/
4. [ CITATION JOB \l 1033 ]
https://www.researchgate.net/publication/338712031_JOB_COSTING_AND_ACTIVITY-
BASED_COSTING_AND_MANAGEMENT_AND_COST_CONTROL
5. [ CITATION OMOGlobal \l 1033 ]
https://www.unilever.com/brands/home-care/omo.html
6. [ CITATION Lab \l 1033 ]
https://www-cdn.oxfam.org/s3fs-public/file_attachments/rr-unilever-vietnam-progress-
challenges-040716-en.pdf
7. [ CITATION OMOVietnam \l 1033 ]
https://www.unilever.com.vn/brands/our-brands/omo.html
8. [ CITATION Uni \l 1033 ]
https://www.unilever.com/sustainable-living/what-matters-to-you/tax.html
9. [ CITATION Uni1 \l 1033 ]
https://www.unilever.com/about/who-we-are/our-strategy/
10. [ CITATION Uni2 \l 1033 ]
https://www.unilever.com/sustainable-living/reducing-environmental-impact/water-use/
11. [ CITATION Uni20 \l 1033 ]
http://en.vbcsd.vn/detail.asp?id=574
12. [ CITATION Uni201 \l 1033 ]
https://www.unilever.com.vn/brands/our-brands/omo.html
13. [ CITATION Uni202 \l 1033 ]
https://www.unilever.com.au/brands/home-care/omo.html
14. [ CITATION Vietnamese20 \l 1033 ]
https://qandme.net/en/report/Vietnamese-washing-powder-brands-preferences.html
15. [ CITATION Wor20 \l 1033 ]
https://www.unilever.com/about/innovation/working-in-unilever-r-and-d/

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