VIETNAM NATIONAL UNIVERSITY – HO CHI MINH

INTERNATIONAL UNIVERSITY – SCHOOL OF BUSINESS

GROUP PROJECT
TOPIC
THE SUPPLY CHAIN OF VINAMILK COMPANY

Course: Logistic and Supply Chain Management

Instructor: Ngo Thi Thao Uyen
Class: BA022IU – Group 8
Group member: Vo Ngoc Quynh Anh - BABAWE18467
Nguyen Bao Tran - BABAWE18468

Huynh Thi Thao Vi - BABAWE18591

Nguyen Tuan Kiet - BABAWE18618
Luu Nguyen Quynh Anh - BABAWE18490

1
 TABLE
OF
I. INTRODUCTION
CONTE
NT 1. Background
……………………………...3
Information……………..

2. Vinamilk’s Supply Chain…………….

………………………….......4

II.BODY

1.Methodology………………………………………………....4

2. Solution……………………………………………………...7

3. Recommendations…………………………………………...8

III.CONCLUSION….………………………………..……...12

IV. CONTRIBUTION FORM……………………………....13

2
II. INTRODUCTION
Vinamilk, a subsidiary of Vietnam Dairy Products Joint Stock Company (VDP), is the country's
largest dairy product producer. VDP's income comes almost entirely from dairy products. VDP
currently controls 53 percent of the liquid milk market, 84 percent of the yogurt market, 80
percent of the condensed milk market, and 18 percent of the powder milk market in Vietnam.

 VDP is a highly effective companies at driving alignment between its business and
operating models.

 VDP generates value by producing high-nutrition, low-cost dairy products, and captures
value by using VDP's extensive distribution network to quickly deliver perishable
products to customers, especially children who need a high level of nutrition for
development

 VDP has three main processes that transform its assets into valuable actions to support its
business model and competitiveness: procurement of raw materials, production, and
distribution.

The process provides a breakdown of how the Vinamilk's goods are produced and moved to
some specific destinations. In the operation step (input supply), the Vinamilk company collected
3
the large amount of raw fresh milk from 12 own farms and more than 6,600 contract farmers.
Also, the fresh milk was collected by 80 intermediate centres to accredate the quality for food
safety and hygiene before being sent to the factories. Moreover, Vinamilk company also
imported some tastes of milk powder from other countries such as USA, Europe and Oceania to
create the good quality for their prooducts. In the following step, Production stage, the
pasteurized milk, after being put into the factory, is processed into a variety of products such as
liquid milk, powder milk, yogurt, condensed milk and beverages and ice cream. After being
carefully packaged and labeled, vinamilk's products are directly distributed to commercial
locations through distribution channels. for example, for the traditional distribution channel, all
products are sold to wholesalers, which then distribute to retail locations across the country, from
which the consumer is products can be purchased directly through retail channels. Futhermore,
for the distribution channel of key accounts, Vinamilk company focuses mainly on bringing
products made from fresh milk directly to hospitals serving patients, HORECA, schools for
students and IP. where there is a basic need for milk. Last but not least, products after being
stocked are transported to large commercial organizations such as supermarkets, convenience
stores, and 430 authorized dealers of Vinamilk. With the diversity of market segments, as well as
the wide distribution across the country, Vinamilk has always received great support and concern
about consumers' products, helping its reputation to stand firmly in the market receptors.

III.METHODOLOGY
1. Inbound:
One of the main problems of Vinamilk is difficulty in importing raw materials to produce a few
of product lines like Powdered Milk for infants and toddlers and adults as well as Organic
Nutrients.

4
Vinamilk shows that to make sure the production standards in produce Powdered Milk and
Organic Nutrients, they need to import a few of special raw materials from the United States,
Australia, New Zealand, the EU and Japan.

Importing material helps Vinamilk meet the domestic demand and achieve foreign standards to
export to many countries and regions.

To solve this problem, Vinamilk can use some methods like replacing distant foreign suppliers
into closer foreign suppliers to shorten supply chain leads to reduce transfer cost or research to
produce raw material by themselves to be more active in production.
 
2. Outbound:

Due to the mass production of Vinamilk, it is difficult to preserve and transport the product lines,
and there are inevitably errors. Food products packaged in tins, paper boxes, bottles, bags ...
when transported and preserved incorrectly, can easily lead to distortion, open packaging, open
lid ... affecting product quality.

 The transit time from warehouses of Vinamilk products to supermarkets, wholesale and
retail stores, and groceries is too long, causing some products to be affected because they
need to be stored in the appropriate cold temperature.

5
In reality, Vinamilk is a popular brand in Vietnam, which has massive distribution channels, so
there are many small and big retailers. It is complicated to monitor all those and maintain the
quality and high nutrition of the milk. Preservation milk in Vinamilk company contributes a
major part, which ensures quality of milk stability. 

 Vinamilk should check the quality of milk and focus to announce how to purchase the
safe and good customers/ end- users.

6
III. SOLUTION AND RECOMMENDATIONS
1. Inbound:
The problem of the imported raw material with a high price of Vinamilk has some reasons.
Firstly, Vietnamese suppliers do not have or do not meet the standards of some raw materials
that need to produce Powdered Milk and Organic Nutrients. Secondly, because of the distance
between Vietnam and supplies like the United States, Australia, New Zealand, the EU and Japan,
it is hard to build the valid supply chain. The supply chain with the first suppliers so far leads to
increased cost when importing raw materials.
 

Vinamilk can research and find the way to solve this problem. Firstly, Vinamilk can find the new
foreign suppliers closer instead. Now, the suppliers of Vinamilk are in the United States,
Australia, New Zealand, the EU and Japan. These suppliers located so far lead to Vinamilk
needing to spend a lot of money to transfer material to Vietnam. Moreover, the large shipping
lanes can reduce material quality leads to affect the final product quality. Therefore, the supply
chain shortening is necessary for Vinamilk. Vinamilk can find new suppliers who meet demand
for quality and quantity and located near Vietnam like Singapore and so on.

7
  
 
Another solution is research and develop alternative materials that are produced by themselves to
be more active in production and reduce cost. Currently, the Powdered Milk and Organic
Nutrients of Vinamilk have a relatively high price compared with the Vietnamese income. One
of the reasons to make the price of this product high is the imported raw material cost is high. So,
if Vinamilk wants to expand the customer segment, they need to decrease the product price.
They can exchange this product price though reducing the cost of materials. Actually, Vinamilk
can invest in research and develop the raw materials that have been imported from foreign now.
Materials produced by Vinamilk 100% can reduce production costs as well as increase customer
confidence. Moreover, it also helps Vinamilk improve the supply chain and be more active in
production.
 

2. Outbound:
8
 Normally, Vinamilk's cold products must be kept below 6 degrees C for storage for 45
days, while at 15 degrees C for 20 days. At normal temperature (30 to 37 degrees C), then
for 2 or 3 days the milk will ferment sour. Therefore, the transportation of product lines
needs to calculate the travel distance, time and temperature in refrigerated vehicles
suitable for each individual product line.

Solution:
 Vinamilk, the leading manufacturer of dairy products in Vietnam is constantly
developing and in order to transport milk in the right temperature conditions, they
need to invest in more refrigerated trucks because the process of preserving the
quality of milk in the The fact that the temperature is cold enough is the most
important part affecting the quality reputation of Vinamilk. The vehicle below has
just been installed and handed over using the TK T-800 self-powered air
conditioner with enough capacity to cool and freeze the product to -25 degrees
Celsius when needed. Add more refrigerated vehicles to make the delivery
process faster and more convenient

 Build more distribution storage points to shorten delivery distance and time

9
 The majority of Vinamilk’s customers reach point is small individual retailers with
limited shelf space in downtowns and small villages. Therefore, the quality of the milk
can be affected when delivering products to customers. The diversification of the product
portfolio in Vinamilk including liquid milk, powder milk, yogurt, condensed milk,

10
 beverages & ice cream, requires different methods to preserve the qualification. With
powder milk and condensed milk, the small individual retailers can be easy to ensure the
quality of the milk. However, with others, they need to maintain the temperature is lower
than 6°C and remote retailers do not have good facilities. In fact, a lot of problems are
made from small individual retailers that cause dissatisfaction for customers. Even
Vinamilk tries to deliver on time and keep their products with high quality to customers.

Solution: To deal with this issue, Vinamilk has already repaired the document and provides
freezers and fridges to preserve their special products for small individual retailers. They should
minimize the inventory level at remote retailers and optimize small delivery by automatic
management systems. Area managers of Vinamilk must check their product in their locations and
make sure the milk served to customers is good and safe. Moreover, Vinamilk should do the
advertisement for their customers/end-users to announce how to preserve the milk such as
temperature, and their product they should choose to purchase.
After all, Vinamilk must handle this issue from the supply chain and even their end- users, bring
diverse and convenient experience to customers.

11
IV. CONCLUSION
Vinamilk has become increasingly attached to consumers for many years. There are
many reasons to explain that, but the reason for Vinamilk's success is the company's
supply chain operations. Based on the trust of consumers, Vinamilk has always been on
the list of top 10 high quality Vietnamese goods for many years. Besides, there are still a
few limitations mentioned and addressed in the above report. We hope that the above
views and opinions will contribute to providing more information and knowledge for
readers as well as consumers. In addition, we hope that Vinamilk will constantly improve
their products to better meet the needs of consumers.

V. CONTRIBUTION FORM 
Group Contribution Form
LOGISTICS AND SUPPLY CHAIN MANAGEMENT

These ratings should reflect each individual's level of participation, effort, and sense of
responsibility, not his or her academic ability. The maximum score that an individual can
earn is the group score for the lab report.  Individuals that have been assessed at an ordinary
or below rating will have a lower score than the group score.
The possible ratings are as follows:

Very Good (5) Consistently did what he/she was supposed to do, very well prepared and
cooperative.
Satisfactory (4) Usually did what he/she was supposed to do, acceptably prepared and
cooperative.
Ordinary (3) Often did what he/she was supposed to do, minimally prepared and cooperative.
Marginal (2) Sometimes failed to show up or contribute to group planning/lab-work/report and
discussions
Deficient (1) Consistently failed to show up or contribute to group planning/lab-work/report and
discussions.
No Show (0) No participation at all.

12
 Names ID Rating Signature
Nguyen Bao Tran BABAWE 18468 5 Tran
Vo Ngoc Quynh Anh BABAWE 18467 5 Anh

Huynh Thi Thao Vi BABAWE 18591 5 Vi

Nguyen Tuan Kiet BABAWE 18618 5 Kiet
Luu Nguyen Quynh Anh BABAWE 18490 5 Anh

13