Vinamilk Introduction Vinamilk, which stands for ee Vietnam Dairy Products Join Stock Company, was established in 1976 as VUGN CAO VIET NAM the state-owned Southern Coffee-Dairy. lit has reached the title of the biggest dairy company and has been listed as 15" largest company currently. Vinamilk has dominated approximately 75% of the milk market of our nation and this ‘company has a solid distribution network which spread through 64 provinces with 183 distributors ‘and 94000 points of sale; also, Vinamilk has exported their products to other countries such as Netherland, The United States, France, Canada, and Germany... and'soon, Current Stage Vinamilk has continuously been the biggest dairy campany in Vietnam since establishment in 1976 and its current market shares account for 50% in Vietnam dairy field. Vinamilk’s growth rate of total sales, profit before taxes and average equity in 5 recent years have been 31%, 31% and 28%. Total revenue of this company in 2013 was approximately 1.5 billion USD and itis expected to reach 3 billion USD of total revenue in 2017, {In 2013, 2 milk farms of Vinamilk was given ISO 9001:2008 Certificate for reaching the standard by Bureau Veritas Organization from France. Currently, it has. milk farms throughout the ‘country and in the near future it will invest in expanding its milk farms with advanced technology , ‘which will bring Vinamilk to a higher stage of standard dairy company with international quatity. Mission \Vinamilk commits to provide the community with the best and highest quality source of fhutrition which derived fram respect, love and its responsibility to peaple lives and society. Core Value 6 0 © INTEGRITY RESPECT Equity Van M. Vat -vuva2@uhkcez Page 16 6 MORALITY COMPLIANCE Business Philosophy Ey — Eno Outstanding Achievements Through 38 years of establishing and development, Vinamilk has been receiving these honors + From 1995 — Recent: ‘Top 10 Vietnam high quality goods + Year 2010: ‘Top 200 businesses under 1 billion USD in Asia Pacific (According to Forbes Asia) + Year 2013: Placed as 2“ in top 10 largest private businesses in Vietnam 1" place in the best SO listed firms in Vietnam (According to Farbes Vietnam) ‘Most favourite Green Business and Product voted by consumers * Year 2010, 2012, 2014: National Brand (According to Ministry of Industry and Trade) Van M. Vu - vuva2@uhk.ce Page 2Vinamilk’s products Liquid milk: © UHT (Uitra Heat Treatment) Fresh Mi UHT Fresh Milk Low-Fat Vinamilk 100% UHT Fresh Milk Vinamilk 100% Iii, UHT Fresh Milk 100% Twin Cows © Pasteurized Milk Pasteurized Fresh Milk Low-Fat Vinamilk 100% ii, Pasteurized Fresh Milk Vinamilk 100% © UHT Milk i. UHT Milk Fortified With Micronutrients (Vinamilk ADM+) UHT Milk Flex ~ Low-Fat & Calciurn-Rich Flex UHT Milk ~ Lactose-Free UHT Milk Vinamilk vv. UHT Milk Vinai Star UHT Drinking Yogurt © Susu UHT Drinking Yogurt © Vinamnilk UHT Drinking Yogurt © Vinamilk Ozela UHT Drinking Yogurt Probiotic Drinking Yogurt Spoonable Yogurt For Skin Beauty Vinamilk Aloe Vera Yogurt Probeauty Yogurt © For Digestion Support i. Vinamilk Probi Yogurt © For Kids Susu Fresh Cheese ‘Susu Yogurt * For Dieters i. Vinamilk Kefir Yogurt ii, Vinamitk Yogurt No Sugar, Less Sugar © From Fresh Milk 100% 1. Vinamilk Yogurt from Fresh Milk 100% * For Daily Essential Nutrition ‘Vinamilk Sweetened Yogurt |. Vinamilk Star Yogurt Powdered Milk and Nutrition Powder ‘© Powdered Milk for Pregnant and Breast-Feeding Women Van M. Vu -vuva2@uhk.cz. Page 3Condensed Beverages Ice Cream i. Dielac Optimum Mama ii, Dielac Mama Nutritional Products for Infants and Toddlers: i, Dielac Grow Dielac Alpha Dielac Alpha Gold Dielac Optimum Dielac Star Care Dielac Pedia infant Cereals i. Ridielac Alpha ‘Special Nutrition Products for Adults i. Vinamilk Sure Prevent ii, Vinamilk CanxiPro i. Vinamilk Diecerna iy, Vinamilk Lose Weight v. Vinamilk Nutrition Milk Southern Star Sweetened Candensed Creamer Longevity Sweetened Condensed Milk Fruit Juice 1. Viresh 100% Fruit Juice ji, Viresh Fruit Necta i. Viresh Juki Multi-Vitamin Juice iv. Viresh Smoothies Aloe Vera Drink 1. Viresh Aloe Vera Bottled Drinking Water i. Icy Bottled Drinking Water Salty Lemonade i. Icy Salty Lemonade Tea i. Lincha Lingzhi Tea |. Viresh Artichoke Tea Vinamitk ice Cream i. Nhoe Kem i, Vinamilk Ice Cream (Boxes & Cups) Cheese (Vinamilk Cheese) Van M. Vu -vuva2@uhk.cz, Page +Soy Milk: '* High Protein Goldsoy Soy Milk + Goldsoy Canxi-0 Say Milk * Goldsoy Canxi-D Corn Flavour Soy Milk Vinamilk’s Supply Chain Structure Supplier ‘Dairy Farms Tuyén Quang BN ~Dairy Farms Binh Dinh PASSION ANTI @mN cDairy Farms Thanh H6a Dairy Farms Lam Dong Dairy Farms Tay Ninh Fe EOI os onerra (SEA) Pte ltd milk ‘*Hoogwegt International BV ats *Perstima Binh Duong celal) GEE otra pak Indochina eee WE Teal att Delivery of Material - Production Inventory Van M. Vu - vuva2@uhk.ce Page §“Transported by tank truck to 2 production inventories in Ho-Chi Frosh milk collected from the ‘Minh and Hani and writ be farms transported to the faetories . — »> © —— p> @ Teper ose a aconmiaanemennns fo Production ~ Milk Factories (ME) |. a =. es L. oo DOSS ht _ =a |. EEE ess . Ea) \. ES Kam New Zealand : Miraka milk factory Store of finished goods After manufacturing the finished goods will be imparted to two big production inventories in Ho Chi Minh (in the South) and Hanoi (in the North) for safely shipping under strict management to ‘the distribution channels and final customers, Distributors and retailers © Domestic Distribution Channel Model Van M. Vat-vuva2@ubkecz Page 6Madern Channel = Channel © Foreign Distributors by Regions “Cambodia ‘vietnaen Philippines Sei Lanka Ae ons “Nigeria Guinea Angola alt Bulgaria Maldives "Us, Australia, Canada... Customers © Individual customers © Organizations Van M. Vu - vuva2@uhk.cz Page 7Roles of each members i Vinamilk’s Supply Chain Suppliers For the sustainable development purpose aid for the high quality products, itis @ must to guarantee the standard of all the supplying materials. That is the reason why suppliers play an important rae in Vinamilk’s success and also contiibute to the affordable products For the customers. Fonterra is @ global, co-operatively-owned company, also one of the best companies in dairy preduets field. The company is holding approxienately 30% of the world’s dairy exports and it provides high class powdered milk to mary organizations including Vinarill Hoogwegt international was established in 1965 inthe Netherlands, with more than 40 ears of experience Hoogwegt Group consisted of the most significant dairy companies all aver the world. Having a partner as Hoogwegt International is considered to assure the precise information about dairy products business and catehring up with the new trends of customers as well, Furthermore, it has such stable network with many large factories which can help Vinamilk widen its business network. Vinamilk has many close connections with other suppliers for more than 10 years whieh also devote to its success story. ‘Tetra Pak is one of the largest interriational companies with headquarters in Sweden which Supplies processing solution and products packaging for more than 170 countries. in 2013 it has provided Vinamilk with the Integration and automation technology in the new built factory that helps ehhanee the efficiency production within the factory. ‘One more factor which is taken into account of Vinarnilk competitive advantages is the fresh mitk collected from the farms. After being bought fram the farmers, the fresh milk will be immediately moved to the milk hubs within 2 hour in cold storage system and then they will get the quality check with the set of standard which are dry matter, fat, microbiology in order to make sure the material is good enough, Especially, for the UHT milk production, the fresh milk has toibe tested with 75 degree alcohol to inspect the precipitation. After that, the qualified fresh milk will be transported to the factories and wait far the production and in 2013, Vinamilk has bought 156,562 tons of milk froti the farms in total Perstima Binh Duong has continuously been a long-term partner of Vinamitk since establishment in 1976 with the provision of high quality Tins. which took part in the ‘That are the reasons why Vinarhilk promises to bring the highest quality dairy products to the customers since they are strietly inspecting every issues fram the beginning. Delivery of Materials For the purpose of safely transporting these materials under strict rules afid to assure the quality of tthe materials, Vinamilk has owned 2 logistics enterprises on the North anié South of Vietnam. Their furections are to store the materials serve for the production lines and ship the products to the distributors as well as the consumers through the truck shipping system. This also ta make sure that, ail the products will be easily shipped since these logistics enterprisas locate at two directions of Vietnam whieh is pretty flexible. Van M. Vu-vuva2@uhiccr, Page 8HB Chi Minh Logistics Enterprise: 32 24ng Van Bi, Trurdng Tho Ward, Thi Oi Distriet, HCMC © HANNGI Logistics Enterprise: Km 10 Route S, Duong Xa commune, Gia Lim District, Hanoi city Production From October 2013, Vinamilk has adapted new production technology which is an automatic and closed production tine fram raw materials inputs to products output. Raw fresh milk receiving area # After gaing through quality check, measurement equipment and clarification; fresh milk will bbe poured into the cold tank system (150m*/tank} ‘Cold tanks (150m*/tank) © From the cold tanks, the raw fresh milk will go through many stages sueh as centrifugal separation of bacteria, assimilation, pasteurization and get cooled down to 4"C and transferred to other tanks and get ready for UHT pasteurization processes. Centrifugal Separation of Bacteria Machine Van M. Vu-vuva2@uhk.cz, Page 9UAT pasteuctration systenr ‘Thank to the combination of these factors: advanced processing technology, UT pasteurization and aseptic filling technology, the praducts can keep the good flavour within 6 manths without any preservatives Filling system © Automatic LGV Robot will mave finished-goods pallet to the smart storage. They will automatically move the packaging roll and packaging materials to other machines, they also recharge battery withaut human control. Automatic LGV Robot Van M. Vat -Vuva2@uhkecz Page 10‘LGV Robot looks for battery to automatically recharge Vinamilk 's factories list: Vinamilk currently owns 12 factories lacated throughout the country + Trrdng Tho Milk Factory : 32 63ng Van BISt., Trubng The Ward, Thi Bite District, HCMC © Specializes in manufacturing : sweetened condensed milk, UMT milk, Soya milk, Yogurt, Fruit luice, Cheese *Théng Nhét Milk Factory : 12 B8ng Vin BISt., Trutmg Tho Ward, Thé Bure District, HEM © Specializes in manufacturing : sweetened condensed milk, UHT milk, icecream, yogurt and drinking yogurt + Dielac Milk Factory : Ha NOi Highway, Bién Héa | Industrial zane, Binh An ward, Bin Héa City, BBng Nai province © Speeializesin manufacturing : powtlered milk for children and adult, euteitc powder for children + Vigt Nam Powdered milk Factory :9Ty Do Avenue, VSIP1. Industrial Zone, Thue An commune, Binh Ouang province © Specializes in manufacturing : powdered milk for children and adult + Binh Binh Milk Factory : 87 Hoang Vin Thu St., Qui Nhon City, Binh Binh Province © Specializes in manufacturing : UHT milk, ice cream, yogurt and drinking yogurt + Ngh@ An Milk Factory : Sao Nam St., Nghi Thu Ward, Cita L® commune, Ngh@ An provinee © Specializes in manufacturing ; condensed milk; milk, yogurt * Séi Gon Milk Factory : 1-18 Block 1, G1 Area, Tan Thdi Hiép Industrial Zone, lane 80, Hiep ‘Thanh ward, District 12, HCMC © Specializes in manufacturing : milk, yogurt and drinking yogurt + Clin Tha’ Milk Factory : Block 46, Trd Néc 1 Industrial Zone, Tra Née Ward, Binh Thay District, Cin Thorcity © Specializes in manufacturing : mi, yogurt, ice cream cake + Tién Son Milk Factory : Titn Son Industrial Zone, Hodn Son commune, Tide Du Distriet, Be Ninh province © Specializes in manufacturing : condensed milk, yogurt, milk and fruit juice, ice cream © Ba Nang Milk Factory : Block Q, Street 7”, Héa Khénh industrial Zone, Hoa Khanh Bac Ward, LiGn Chiéu District, 08 NEng City Van M. Vu-vuva2@uhb.cz, Page 11© Specializes in manufacturing : milk, yogurt Vide Nam milk Factory = Block A-a-CN,A-5-CN, A-6-CN, A-7-CN, MY Phurdc 2 Industrial Zone, ‘BEn.Cit District, Binh Duong province © Specializes in manufacturing : condensed milk, yogurt, mill and fruit juice, ice cream and soya milk + Vigt Nam Beverage Factory : Block A, NA7 St. My Phurdc 2 Industrial Zone, MY Phuréc Town, ‘Bén Cit District, Sinh Duong province © Specializes in manufacturing ; fruit juice, tea. + Miraka Milk Factory :iocates in New Zealand © Specializes in manufacturing : UHT milk, powdered milk All Vinamilk’s laboratories in these factaries have received the ISO/IEC 17025:2005. Certificate in chemistry and biology aspects and all the factories have the environmental management system that achieved ISO 14001:2004 Certificate. With the Tetra Pak Plant Master Automation solution, Vinamilk can easily and cantinuously keep track of all the processes within the factories to make sure the production accurs under high standard and Tetra Pak provides the information that enhances the efficiency of the production Store of finished goods ‘The special things about this losed production line is that it has the first and biggest smart storage in Vietnam with the area of 6000 m’ and 20 eritry ports; the starage is 105 meter long, 35 meter high including 17 bracket floors and 27168 storage spots. With this, the import and export of materials andl goods will be automatically operated with 15 automated rail guided vehicles which will transfer the finished products pallet to the storage and stacker crane robots will arrange these pallets on the shelf brackets. Goods in the smart storage Van M. Vat -Vuva2@uhkecz Page 12With the storage management system Wamas integrated with management system EAP and Tetra Pak Master Automation solution, which bring the smooth and seamless production within the factories with other activities such as production planning, i finished-goods as well \porting materials and exporting Distributors and retailers Having a broad distribution network throughout Vietnam and also in other countries have left significant impact on Vinamilk’s success, also this distribution network assure the company to teach all the customers from three parts of Vietnam which are the narth , centre and south and also create opportunities to present its new products easily. Until the end of 2013, Vinamilk has more than 224,000 retailers nationwide and 60 product showraoms. For domestic morke! \Vinamilk assigns the products to their distributors and from the distributors, the goods will, ‘g0 to the retailers and final custamers are the consumers who will directly use its products, For the domestic retailers system, itis divide 0 2 tiers: + Group of dairy products such as powdered milk and condensed milk: Vinamilk’s condition is that this retailer must not sell any other products from other company and the retailers will receive good promotion from Vinamilk to maintain the relationship. In case the contract is broken, Vinamilk will strictly fire the retailers to set an example for others. * Group of ice cream, yogurt, UHT milk and liquid milk: Vinamilk’s condition is more opened and flexible to these retailers since they are selling many kinds of products from many companies and this is not the crucial target of Vinamilk, Therefore, the more retailers ofthis group, the more popular its products will be. Normally for each retailer, it depends an the location and selling place that Vinamilk will set the sales amount for each place and reward them monthly, quarterly. Currently, in the domestic market, there are two distribution channels: madern and traditional channels: Traditional Channel Tt es Van M. Vu -vuva2@uhkcz, Page 13© Modern channel: Vinamilk directly sell the products to approximately 600 nationwide supermarkets. The revenue in this channel contributes to 10% of domestic revenue. * Traditional channel: Vinamilk established a system including 266 exctusive widespread contributors. The locations far these contributors are divided clearly to serve the nearby retailers. On 31" December 2013, Vinamilk has owned more than 224,000 retailers, which \was 24,000 more increased compared to the end of 2012. + Moreover, Vinamilk has set up 60 product showrooms so far and it is expected to be 39 more in 2014. For fareign markets: ‘The export in 2012 and 2013 accounted for 14% of total revenue and the primary exported products are condensed milk and powdered milk and the export sales reached 4,415 billion VND. The markets for these products are focused mainly on South East Asia, Middle East and Africa; there are many more markets as we can see from the picture above, ‘Moreover, Vinamilk has one associated company called Miraka located in New Zealand with the principle purpose is to produce fresh milk and powdered milk and one subsidiary company that is Vinamitk’s new acquisition on 31° December 2013 in State California, United States. ‘Van M. Vu - vuva2@uhk.cz Page 14Distribution management system: ‘To efficiently manage these distribution channels, Vinamilk has adopted and successfully, applied these advanced IT techniques into their operation such as Enterprises Resource Planning (ERP), Oracle € Business Suite system and Customer Relationship Management (CRM). + Ofacle E Business Suite system has been officially applied into the operation syatem of ‘Vinamilk since January 2007 and the company was recognized as the 1" one to successfully use this system, The Oracle E Business Suite solution that helps connect to 13 places including headquarters, factories and nationwide storages. The information technology facilities also were standardized, synchronized and consolidated. * Customer Relationship Management (CRM) : with this solution, all the processes will be optimized and provide all the information of customers for the sellers in order to-create a lose relationship as longs the convenience far customers to contact the sellers and the company anytime, anyplace and by any means of communication, This isa really effective system to help enhance the efficiency customer policy as well as the distribution program for each distributors and retailers based on the customers’ information. © Enterprise Resource Planning (ERP) : this is one of Vinamilk’s most productive tools that assist the employees in working, which allow the distribution channels thraughout Vietnam can access to the headquarter in both offline and online modes. With the information centre, Vinamik would be able to make critical decisions on time and also boost up the planning processes effectively. By updating customers’ information of each retailers, the company can satisfy the consumers in such higher stage; furthermore, this also support the workers in the retailers to be more flexible, to keep track of the trends of the market and also to improve their personal skils, Besides, Vinamilk also keep an eye on the price policies and discount throughout the distribution system while the customers would also receive the benefit from a better service, which is also an advantage to Vinamilk. By applying these advanced informaticn techndtogy system into the whale processes of the company, Vinamilk has successfully manage all distribution channels, improve employees’ skills and ‘Satisfy consumers’ need which increase day by day. Therefore, at the end of 2013, the total revenue Vinamitk had earned was 31,586 billion VND which wasa little bit lower than in the plan; however, this total revenue has increased 17% comparing to that of 2012. Customers Consumers are also a part of the supply chain, one of the fundamental factors which bring profit and also send back feedback to the company. With the feedback from customers, they wil show the company what they are into, what they are concerned about in the products as welll as expected demand that Vinamilk may need to adjust the flexibility and improve its supply chain. Besides, Vinarnilk wants the consumers understand more that they are not just selling the products, ‘they also distribute to the community such as creating many funds to support the poor children from remote area and also show the care for the enviranment which is really big problem recently for ‘every companies. By doing that, Vinamilk not only gain the benefit from the customers but also achieve the reputation and supports from them. Van M. Vu-vuva2@uhicce Page 15Advantages and Drawback of Vinamilk’s Supply Chain Advantages According to all the information above, we can see Vinamilk got these following advantages: + Vinamilk is the biggest dairy company that have been operating for more than 37 years * Vinamilk got the best dairy manufacturers in Vietnam with advanced technology that reaches international level, High quality products and flexible products portfolio which can satisfy consumers’ need. * Strong and nationwide distribution channels with 266 exclusive distributors, more than 224,000 retailers and sells directly to more than 600 supermarkets throughout Vietnam; besides, Vinamilk exports its goods to many other countries. + Vinamilk got skilful and experienced Research and Product Development Department and also collaborate with other international well-known research companies to improve the products’ standard and quality as well as satisfy different segments of customers. * Applying highly information technology systems into operation management such as ERP, RM, ERM and so on from production, quality management ta distribution channels. ‘Efficient and highly experience Executive Board in Dairy Field that have been working with the company for many years. They also understand the market and can anticipate the new trends coming up to set up the development strategy far Vinamilk. Drawbacks Besides the advantages, there are still disadvantages remained In Vinamilk’s supply chain. suchas: ‘© Due to the massive distribution channels, it's complicated to monitor all the retailers especially the ones in remote areas. ‘+ Hard to maintain the quality of the milk since not all the remote retailers have good facilities + Lower livestock praductivity comparing to foreign countries and high-cost raw milk from domestic farms affect the revenue. * Depending on exported milk resources, the milk from the domestic farms can only fulfil 30% of production demand; therefore, the stability of suppliers and raw materials cost are based on the world’s supply-demand relationship. Van M. Vu -vuva2@uhk.cz, Page 16Lesson learnt from Vinamilk’s Supply Chain Lesson 1: Supply Chaiir is a competitive advantage of every company Nowadays, efficient supply chain is one of the most significant elements in high developed companies; on the other hand, it has become such a strategic part in winning the market, aot just a functional sequence of processes anymore. For Vinamnilk, it has defined and developed its supply chain to-be such an competitive factor in the tough dairy market. By doing this, Vinarnitk wants to minimize all the casts as well as the transporting and delivery time fram the manufacturers ta the final customers. Moreaver, with highly technical milk manufacturers it will be less complicated to satisfy consumers’ demand. Lesson 2: Develop the Enterprise Risk Management (ERM) to assure the revenue Knowing that for one company, there might be many risks that can occur and affect the company’s productivity and benefit as well as the reputation; therefore, Vinamilk has applied the ERM system into their management, The company is paying effort to complete this system by Keeping track of the products portfolios as well as the suppliers, delivery, and s@ on, Vinamilk alo tries to define what the expecting risks might be in near future and find solutions for them. in 2014, ‘the ERM system will be completely improved and it will be used to monitor all the activities within, the company to make sure there won't be any mistake that might affect the company. Lessan 3: Enhancing the caliebaration with the partners in the supply chain It is really complicated to choose among thousands of suppliers in Asia and! in other continents and also to connect every step in the supply chain continuously. Therefore, Vinamilk has carefully chosen the suppliars as well as ather partners to make sure the quality of the materials and also the finished-goods; besides, Vinamilk has been trying to create a close relationship with all the distributors and the suppliers. This also plays an Important role in Vinamilk’s success. I ‘on 4: Applying the information technology in the supply chain Vinamilk is one of the companies in Vietnam that has been using the management system suchas Enterprise Risk management (ERM), Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) in operating and monitoring the whale sequences of production and delivery. With these systems, Vinamilk can easily keep track of every activities in the company and make sure everything warks smoathly and all the problems will be solved fast to maintain the pproductian’s speed. By doing this, Vinamilk wants to be one of the top dairy companies in the region and also in the warld and bring the best quality to the consumers. Van M. Vit-Vuva2@uhkecz Page 17Conclusion According to all information above, we can see that itis not a coincidence that Vinamilk has become a biggest dairy company in Vietnam. This company has turned out to be a close friend to the domestic consumers and also spread their wings to other countries to bring the best value of dairy products, One of the biggest factors that have significant impact on Vinamilk’s achievements is the Supply Chain and the companys trying every single day to imprave this factor to enhance the quality. However, in my opinion, Vinamilk can do these following things to improve the quality and also increase the raw materials quantity $0 that the drawbacks be solved: + Monitoring the distribution channels even from remote areas # Improve the domestic farms’ productivity to export less milk from other countries # Manage the human resources, make the plans to help the employees improve their working skills and also catch up with the international advanced technology. # Set up long-term strategie plan and stick with it and also enhance the management department within the company Finally, | thinkif Vinamilk keeps on developing its product portfolio and boost up the customer services as well as the quality of the products; their target to reach 3 billion USD of total revenue in 2017 will become true, Van M. Vu -vuva2@uhk.cz, Page 18References Vinamitk Official website : http://www.vinamilk.com.vn/vi Vinamilk Annual Report 2009, 2012, 2013: http://www. vinamilk.com.vn/vi/bao-cao-thuong-nien Miraka Official Website : http://www-miraka,co.na/ Tetra Pak Official Website ; htto://www.tetrapak.com/ Fonterra Official Website : htto://www.fonterra.com/global/en Hoogwegt international bv Official Website : http://www. hoogwegt.nl/en/ Van M. Vu -vuva2@uhk.cz Page 19