FOREIGN TRADE UNIVERSITY

SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS

****************************

MIDTERM REPORT
SUPPLY CHAIN PERFORMANCE MEASUREMENT:
A CASE STUDY OF SCOR MODEL IN VIETNAM
MILK JOINT STOCK COMPANY

Instructors: Ph.D Nguyễn Thị Yến

Ms. Phạm Thị Hiền Minh
Class: TMAE313(2324-2)1.3
Group 14

No. Full name Student ID Contribution

1 Nguyễn Đặng Quỳnh Anh 2112150012
2 Lê Phương Anh 2112150011
3 Phạm Thị Khánh Huyền 2212150084
4 Phạm Yến Nhi 2114110237
5 Phạm Nguyễn Hoài Phương 2112150138
6 Lương Hiền Minh 2112150115
7 Nguyễn Ngọc Thủy Tiên 2113150065

Hanoi, March 2024

 TABLE OF CONTENTS
Section 1: Theoretical framework.......................................................................5

1.1 Supply chain management............................................................................5

1.2 Supply chain performance measurements....................................................5

1.3 Overview of SCOR model............................................................................6

1.3.1 Definition of SCOR model....................................................................6

1.3.2 History of SCOR model........................................................................7

1.3.3 Scope of SCOR model...........................................................................7

1.3.4 Components of SCOR model................................................................8

Section 2: Research methodology and data......................................................10

2.1 Research procedure.....................................................................................10

2.2 Research data..............................................................................................10

2.3 Research method.........................................................................................11

Section 3: Research results................................................................................13

3.1 Overview of Vinamilk supply chain...........................................................13

3.1.1 Supply..................................................................................................13

3.1.2 Manufacturers......................................................................................14

3.1.3 Warehouses..........................................................................................15

3.1.4 Distributors..........................................................................................15

3.1.5 Retailers...............................................................................................15

3.2 Vinamilk’s SCOR model analysis..............................................................16

3.2.1 Plan......................................................................................................16

3.2.2 Source..................................................................................................18

3.2.3 Make....................................................................................................19

3.2.4 Delivery...............................................................................................22

3.2.5 Return..................................................................................................28
Section 4: Discussions and recommendations..................................................30

4.1 Discussions.................................................................................................30

4.2 Recommendations......................................................................................30
 TABLE OF ABBREVIATIONS
No. Abbreviations

TABLE OF FIGURES
Abstract
Introduction
 Section 1: Theoretical framework
1.1 Supply chain management
The supply chain includes all parties directly or indirectly involved in
fulfilling customer requirements. The supply chain includes not only manufacturers
and suppliers but also transporters, warehouses, retailers, and customers (Chopra &
Meindl, 2007). Supply chain management is the integration of business processes
from consumers to primary suppliers to deliver products, services, and information
that add value to customers and stakeholders (Lambert & Cooper, 2000). The basic
goal of supply chain management is to optimize chain performance to add the most
value at the lowest cost. In other words, supply chain management aims to link all
actors in the chain to cooperate with the enterprise leading the chain to maximize
supply chain performance and bring the most benefits to all stakeholders (Shukla et
al., 2011).
Supply chain efficiency revolves around optimizing internal processes. It aims
to minimize costs, enhance productivity, and streamline resource utilization.
Companies achieve efficiency through shorter order processing times, improved
inventory management, and faster delivery (Unleashed, 2019).
On the other hand, supply chain effectiveness extends beyond internal
processes. It considers external factors and stakeholder needs. Effectiveness ensures
that the supply chain meets customer expectations, adapts to changing demands, and
responds to unexpected events (Net Suit, 2022).
1.2 Supply chain performance measurements
According to Ambe et al (2014), performance measurement is the process of
quantifying the efficiency and effectiveness of an action using a set of measures.
Measuring supply chain performance facilitates a better understanding of the supply
chain, positively influences the behavior of participants, and improves overall
performance. There are many performance indicators that can be implemented in an
organization such as: quality, flexibility, cost, supplier reliability, innovation,
responsiveness, delivery time, ordering, final product delivery reliability, product
diversity, and asset management.
 According to Reddy & colleagues (2019), there are three approaches to
measuring supply chain performance: (1) Process-based approaches, (2)
Perspective-based approaches, and 3) Hierarchy-based approaches.
 Process-based approach: Supply chain management is the integration of
processes and related activities from supplier to customer. Researchers look at key
supply chain operational processes to develop performance measurement models
such as: quality measurement and improvement method (Six Sigma), four supply
chain process models ( planning, sourcing, manufacturing, and delivery), an
integrated model that measures supplier-manufacturer-distributor supply chain
performance.
 Perspective-based approach: This approach considers each perspective to
provide performance measures when evaluating the supply chain and provides
interrelationships between these measures. The two main models following this
approach are the balanced scorecard (BSC) model and the supply chain operations
reference model (SCOR).
 Hierarchical-based approach: Hierarchical-based models are useful for
measuring supply chain performance at different levels. Managers will make the
right decisions at each level of the supply chain (strategic level, tactical level and
operational level). Many studies have used this model to evaluate supply chain
performance such as: the measurement model with strategic, tactical and operational
level indicators; measuring performance indicators in an international environment;
Assess the level of safety, risk, and supply chain operational capacity.
1.3 Overview of SCOR model
1.3.1 Definition of SCOR model
"The Supply Chain Operations Reference model (SCOR) provides
methodology, diagnostic and benchmarking tools that help organizations make
dramatic and rapid improvements in supply chain processes" (APICS, 2017). SCOR
acts as the core structure for our operations. It is the only inclusive and globally
acknowledged guideline for supply chains that is available to businesses of all sizes.
By utilizing SCOR, companies can extensively examine and enhance their supply
chain, leading to improved overall business performance.
 1.3.2 History of SCOR model
The SCOR model was created by PRTM (a management consulting subsidiary
of PwC) and AMR Research (now part of Gartner). It is a validated supply chain
reference model endorsed by the Supply Chain Council (SCC) (which merged with
APICS in 2014 and formerly known as the Association for Supply Chain
Management - ASCM in 2018).
In recent years, the SCC has been continuously promoting and improving the
SCOR model through modified versions. The most recent version, SCOR 12.0, was
released in 2017 and has been adjusted to make the supply chain more flexible and
efficient. All these changes have been made to meet the growing demands of
omnichannel supply chains.
1.3.3 Scope of SCOR model
The SCOR model is specifically designed to outline the business activities
associated with meeting customer demand across all phases of operations. It
consists of different components and is structured around five essential management
processes: plan, source, make, deliver, and return. These processes serve as the
foundation for managing both simple and complex supply networks.
Figure 1: Supply Chain Operations Reference Model (SCOR) - Level 1

Source: ASCM (Compiled by authors)

 1.3.4 Components of SCOR model
Table 1: Management processes of SCOR model

No. Processes Functions

Planning processes optimize supply chain efficiency by

determining resources, requirements, and communication chains
1 Plan while considering compliance, transportation, assets, inventory,
and other SCM elements.

Source processes involve acquiring products and services to meet

anticipated or current market demand. This includes various
2 Source activities such as procurement, receiving, quality assurance, and
managing incoming supplies and supplier contracts.

These processes transform finished products into market-ready

items to fulfill planned or actual demand. They encompass order
3 Make types (make to order, make to stock, or engineered to order),
production management, bill of materials, and the necessary
equipment and facilities.

Any processes involved in delivering completed products and

services to meet anticipated or current demand. The objective of
4 Deliver this process is to guarantee timely, accurate, and sufficient
delivery of the product to the designated time, location, and
quantity.

Managing post-delivery customer support activities is part of

5 Return return processes, which involve handling product returns from
both customers and suppliers.

These processes encompass various aspects of supply chain

6 Enable management (SCM), including business rules, facility
performance, data resources, contracts, compliance, and risk
management.

Source: CIO (Compiled by authors)

Figure 2: The SCOR Level-1 Metrics

Source: APICS (Compiled by authors)

 Section 2: Research methodology and data
2.1 Research procedure
The research follows the 9 stages of quantitative research: 1. Start with an
idea; 2. Develop a hypothesis; 3. Research design; 4. Operationalise concepts; 5.
Data collection; 6. Data processing; 7. Data analysis; 8. Findings/ conclusion; 9.
Publishing results.

Figure 3: Steps in Qualitative Research

Steps in Quantitative Research

1. Start with an idea

2. Develop a hypothesis

3. Research design

4. Operationalise concepts

5. Data collection

6. Data processing

7. Data analysis

8. Findings/ conclusion

9. Publishing

Source: Compiled by authors

2.2 Research data
The data included in the report is taken from Vinamilk's 2022 sustainable
development from vinamilk.com.vn. It contains qualitative data, including
information about community impact, environmental stewardship, and corporate
social responsibility
 The Sustainable Development Report 2022 from Vinamilk is a recent and
relevant study that focuses on Vietnam's dairy supply chain. The report provides
insights into Vinamilk's strategy to align with sustainable development goals and
compares its actions to industry standards. With a significant market share in
Vietnam, Vinamilk is a valuable resource for understanding the dynamics of the
dairy supply chain. The report's recent publication ensures accurate and
representative conclusions. Vinamilk collaborates with organizations like the
National Institute of Nutrition and conducts clinical investigations to validate the
benefits of its products. This approach helps the company understand product
quality and supply chain efficiency, ensuring its operations and output align with
industry trends.
This article also needs to have a certain amount of qualitative information
based on previous research, however, due to time limitations, the research team
temporarily only uses reliable secondary sources of information. Applying SCOR
levels at a higher level will be the team's future research direction.
2.3 Research method
Based on the SCOR model, the author collected secondary data on Vietnam
Dairy Products Joint Stock Company Vinamilk from 2018 to 2022, including order
planning and processing, procurement, production, consumption conditions,
packaging costs for unsuitable products, sales revenue for each market, delivery
frequency, contract quantity, contract performance, profit and loss statements, and
financial statements. Based on these data, the authors analyzed and measured
Vinamilk's supply chain performance in the following order. Firstly, analyze the
supply chain in a six stages process: Planning – Sourcing – Making – Delivering –
Returning – Enabling. Secondly, measure the supply chain performance by financial
and non-financial indicators based on the company's financial statements.
In addition, another crucial factor in evaluating the performance of a supply
chain is to know its customers. Companies need to understand what their customers
think and expect to respond promptly and handle customer requests quickly and
effectively. To achieve this goal, Vinamilk has established an extensive distribution
system nationwide, including three main channels:
 - Traditional channels: This distribution channel includes classic distributors
and retailers, such as markets, grocery stores, convenience stores, et cetera.
- Modern channels: This distribution channel includes supermarkets, shopping
malls, and large convenience stores. This channel is rapidly developing to meet the
recent shopping needs of consumers.
- Key account channels: This distribution channel includes large customers
such as schools, hospitals, restaurants, hotels, et cetera. It is a distribution channel
that focuses on customers who require a large amount of shopping.
For Vinamilk, the biggest sales channel is through traditional channels.
Therefore, the author team collected information on product quality, pricing, sales
policies, and brand recognition through feedback from distributors and retailers on
Vinamilk product and service quality.
 Section 3: Research results
3.1 Overview of Vinamilk supply chain
As the leading company in Vietnam in general, and in the dairy industry in
particular, Vinamilk has constantly developed an efficient and sustainable supply
chain. There are six main stakeholders involved in its supply chain and the company
divides its supply chain into three main stages: Material Sourcing, Production, and
Distribution (Vinamilk Corporate Presentation, 2023).
Figure 4: Vinamilk's supply chain

Source: Compiled by authors

3.1.1 Supply
Vinamilk tries to reduce the cost while controlling the quality of the raw
materials and making sure that the material sources are sustainable.
 According to the 2023 Corporate Presentation, Vinamilk owns 14 dairy farms
across Vietnam with up to 40,000 cows in total, all of which meet the international
standards. Since 2016, the company operates the first organic dairy farm in Vietnam
that was certificated EU Organic standard (Vinamilk, n.d.). Raw milk produced
from these farms can meet 50% of the company’s supply. This is part of Vinamilk’s
main strategy to develop a network of safe and quality inputs for the company’s
product. The remaining 50% of the supply of local raw milk is collected from 6000
farmer partners. The company has 83 collection stations in the whole country, to
which the contracted farmers deliver the milk. Furthermore, Vinamilk also has a
Lao-Jargo Dairy farm complex in Laos. To develop and control the raw milk
sources, the Dairy Development Division was set up.
The company also imports milk powder and packaging from other countries
and territories with strict food quality regulations, which are the US, EU and New
Zealand
For other raw materials such as sugar, Vinamilk acquired 65% share capital of
Vietnam Sugar JSC. This company is also the sugar supplier for Vinamilk’s product.
(Vinamilk Annual Report, 2022)
3.1.2 Manufacturers
Since its beginning, Vinamilk has constantly expanded, ungraded, and
optimized its production system.
Until now, Vinamilk owns 13 dairy factories throughout Vietnam, all of which
are located near the fresh milk sources. These include a mega factory in My Phuoc,
Binh Duong, one of the largest milk factories in the world (Vinamilk). The company
planned to construct another two factories in Hung Yen and Moc Chau to increase
production capacity (Vinamilk Annual Report, 2022).
All the production lines use advanced technologies from Sweden, European
nations as G7 members and are strictly controlled according to the ISO standards.
The production process is operated completely closed from raw materials to
finished products. To achieve highest product quality, Vinamilk has adopted state-
of-the-art production technology such as UHT sterilization system and LGV
automatics robots.(Vinamilk)
 Vinamilk also owns 100% equity interest in two milk production companies,
which are Driftwood Dairy Holding in the US and Angkor Dairy in Cambodia
(Vinamilk Annual Report, 2022).
3.1.3 Warehouses
Since 2014, Vinamilk’s largest smart warehouse in Binh Duong has operated.
This warehouse has an area of 6000m 2 with 17 stores and can contain up to 27,000
lots. ERP management system and Tetra Plant Master Automation solution are
integrated to control the production and inventory in the warehouse
3.1.4 Distributors
In Vietnam, besides the headquarter in Ho Chi Minh city, Vinamilk has three
other sales branches in Hanoi, Da Nang and Can Tho. The company possesses two
logistic enterprises in Hanoi and Ho Chi Minh city.
3.1.5 Retailers
Vinamilk has the largest distribution network for dairy products in Vietnam
(Vinamilk Corporate Presentation, 2023)
In the domestic market, Vinamilk’s products reach consumers through the
main three types of networks. The traditional channel reaches 190,000 points of sale
while the number of modern channel sales points across all supermarkets and
convenience stores is 8000. They also have a widespread key accounts network
which include airlines, coffee chains and restaurants in some areas of Vietnam.
Besides, Vinamilk’s Giac Mo Sua Viet stores chain is another notable channel with
nearly 650 stores nationwide. Furthermore, consumers can also buy products online
as the company has been working with 13 E-commerce partners and already has an
E-shop website and the application “Giac Mo Sua Viet”(Vinamilk, n.d.).
In the international market, Vinamilk exported its products to 59 countries. In
2022, over 3,300 containers of Vinamilk’s products were exported (Vinamilk
Annual Report, 2022).
 3.2 Vinamilk’s SCOR model analysis
3.2.1 Plan
Vinamilk's supply chain system is highly detailed and utilizes advanced
technologies to deliver fresh, clean milk to consumers' hands. Here is the supply
chain system of Vinamilk:
Figure 5: Compiled by authors

Source: Compiled by authors

The company's milk supply comes from a network of carefully selected farms,
known for their high standards of animal care and milk production. These farms
follow strict protocols to maintain the health and well-being of their cows, including
regular veterinary check-ups, balanced nutrition, and hygienic milking practices.
To preserve the freshness of the milk, Vinamilk employs a two-time daily
harvesting schedule. This means that the cows are milked twice a day to ensure a
steady and reliable supply of fresh milk. After the milking process, the milk is
promptly transported to specialized facilities equipped with cold storage systems.
These facilities maintain optimal temperatures to preserve the milk's quality and
extend its shelf life.
In addition to its domestic milk supply, Vinamilk also imports milk powder
from renowned countries such as the USA, Australia, New Zealand, the EU, and
Japan. This strategic move allows Vinamilk to access a wider range of high-quality
milk sources and meet the growing demands of its consumers. The company also
imports advanced machinery and equipment from these countries, further enhancing
its production capabilities and ensuring efficient and precise manufacturing
processes.
Once the milk, whether sourced domestically or imported, reaches Vinamilk's
production facilities, it undergoes a series of rigorous quality control checks. State-
of-the-art technology and stringent quality assurance measures are employed to
ensure that the milk meets the highest standards of safety, hygiene, and nutritional
value. Vinamilk takes pride in its commitment to delivering products of exceptional
quality to its customers.
In the domestic market, Vinamilk operates 13 milk factories strategically
located across the Northern, Central, and Southern regions of Vietnam (Phan, 2021).
This widespread presence allows the company to efficiently distribute its products
throughout the country, ensuring accessibility to consumers across various regions.
Vinamilk also maintains warehouses that serve as storage facilities for the milk
before they are transported to the production sites or distributed to retailers.
Once the milk products are ready for distribution, Vinamilk utilizes a well-
established logistics network to transport them to different market segments. These
include confectioneries, where the milk is used as an ingredient in the production of
various dairy-based sweets and desserts. Schools and hospitals also receive
Vinamilk's products, providing nutritious options for students and patients.
Moreover, the company's products are made available in supermarkets and
convenience stores, ensuring convenient access for consumers seeking high-quality
dairy products.
Moreover, amidst the global context characterized by China's "zero Covid-19"
policy and the ongoing political conflicts between Russia and Ukraine, the supply
chain for energy, raw materials, and food has experienced disruptions, leading to
increased inflation. In response to these challenges, Vinamilk has displayed
adaptability and resilience by transforming its operations to align with international
industry standards. The company has prioritized optimization and standardization of
its operational processes while incorporating innovative approaches to enhance the
value of its product lines across various market segments, including the economic,
popular, and high-end classes. Vinamilk recognizes the importance of meeting the
diverse needs of the market and has therefore focused on research, investment, and
the transformation of production and supply models. These efforts aim to ensure
green practices, cleanliness, and transparent product information (Sustainable report
Vinamilk, 2022)
3.2.2 Source

a) Dairy Development Division (DDD)

The primary role and objective of Dairy Development Division (DDD) is to
establish and enhance the fresh milk raw material region (STNL) in accordance
with rigorous technical standards set by both Vietnam and international regulations.
This initiative aims to ensure a reliable source of pure fresh milk to meet the
production demands of Vietnam Dairy Products Joint Stock Company
(VINAMILK) at their dairy plants. Vinamilk is currently operating and managing a
system of four companies specializing in dairy cattle and fresh milk production,
including Dairy Cow Company Limited (“Vietnam Dairy Cow Company” - 100%
charter capital), Thong Nhat Thanh Hoa Dairy Cow Company Limited (“BS TNTH
Company” - 100% charter capital), Lao-Jagro Development XiengKhouang Co.,
Ltd. (“Laos-Jagro Company” - 87.32% charter capital) and Moc Chau Dairy Breed
Joint Stock Company (“Moc Chau Milk” - owning 49.17% of voting rights).

b) Source of raw material

- Domestic raw material

Since September 2020, Vinamilk has owned more than 12 large-scale farms,
managing and exploiting approximately 150,000 cows for milk production,
supplying over 1,000 tons of fresh raw milk to the market per day. The proactive
system aims to replace fresh milk raw materials by encouraging the expansion of
milk procurement agents, providing support to farmers and households engaged in
cattle farming. These agents will serve as intermediaries, ensuring that the
purchased milk meets the required standards.

- Foreign raw material

Raw materials: Alongside domestic sources, Vinamilk also gives priority to
selecting raw material suppliers from countries like New Zealand, Europe, and the
United States. These countries have developed industries, adhere to standards, and
ensure food safety.
Machinery and equipment: Regarding machinery and equipment, Vinamilk
produces all its products using state-of-the-art machinery and equipment systems
from Sweden, European G7 countries. These systems are closely monitored and
adhere to international ISO standards, certified by leading global companies for
quality management.
Brand identity and Packaging: In July 2023, Vinamilk introduced a new brand
identity that resulted from nearly a year of preparation involving over 55 experts
and consultants in creativity, strategy, and renowned global brands. Vinamilk
utilizes packaging from two European suppliers, Tetra Pak and Combibloc.
3.2.3 Make
By aiming to be the foremost symbol of trust, the company seeks to position
itself as a reliable provider of high-quality and beneficial products that contribute to
the well-being and vitality of individuals. Therefore, the process of making milk is
very carefully and well-formed to bring the fresh and safe milk to the customers
 Figure 6: Process of making milk in Vinamilk

Source: Compiled by authors

At livestock farms, VINAMILK selects cattle that meet the standards and
sends engineers to guide farmers in raising cattle according to standards of ISO
9001:2015, Global G.A.P, Organic EU, Organic China (Vinamilk sustainable report
2022). Fresh milk from dairy farms is quickly transported to raw milk transfer
stations. At the transfer stations, quality control officers from the factory conduct
tests and analysis, including measuring the acidity, sensory evaluation of taste and
smell, microbiological indicators, and lactic fermentation. Milk containing
antibiotic residues is not purchased to protect the health of consumers. According to
the Vinamilk sustainable report 2022, 88% Raw material suppliers were granted
with GFSI-recognized Food Safety Certificate.
These tests are regularly conducted during the morning and afternoon milk
collection. Milk that meets the requirements is sampled and stored in refrigerated
tanks at the transfer stations. The milk samples are encoded and sealed before being
sent to the factory laboratory for analysis of dry matter content, fat ratio, protein
content, sugar content, and freezing point. Equipped with modern machinery and
equipment, VINAMILK can detect and prevent most cases of adulteration in milk.
Only milk that meets the standards is purchased.
After quality testing and measurement, the filtered fresh milk is transferred to
cold storage tanks (150 m3/tank). From the cold storage tanks, the raw milk goes
through processing stages: centrifugal bacteria separation, homogenization,
pasteurization, and rapid cooling to 4°C. The centrifugal bacteria separation
machine helps remove harmful bacteria and microbial spores.
Then, the milk is transferred to ready-to-sterilize UHT tanks. The advanced
heat sterilization system heats the milk up to 140°C, and then the milk is rapidly
cooled down to 25°C, preserving its natural flavor, nutritional components,
vitamins, and minerals. The milk is transferred to sterilized packaging containers in
the sterilization tanks, awaiting aseptic filling. Through the combination of
advanced processing technology, UHT sterilization technology, and aseptic filling
technology, the product can maintain its fresh taste for up to six months without the
need for preservatives. Automatic LGV robots transport finished pallets to the smart
warehouse area. Additionally, LGVs automatically transport packaging reels and
packaging materials to the machines. The LGV robot system can recharge its
batteries without human intervention.
The leading intelligent warehouse in Vietnam covers an area of 6,000 m2, with
20 entrances and exits, a length of 105m, a height of 35m, and 17 levels of shelves
with a capacity of 27,168 pallets. The automatic import and export of goods are
carried out by 15 RGV (Rail Guided Vehicle) autonomous trucks, which transport
finished pallets into the warehouse, and 8 Stacker Cranes that stack pallets onto the
frame structure. The management of incoming and outgoing goods is based on the
Wamas software.
The operational system is based on the Tetra Plant Master automation solution,
which allows for the integration and connection of the entire factory, from raw
materials to finished products. This enables the factory to control all operations,
continuously monitor and control quality. The Tetra Plant Master system also
provides all necessary data to help the factory continuously improve production and
maintenance.
Furthermore, the Wamas warehouse management system integrates with the
ERP management system and the Tetra Plant Master automation solution, ensuring
smooth operations throughout the company, from production planning and raw
material procurement to finished product delivery.
Not only that, from the first two factories, Truong Tho Milk Plant and Thong
Nhat Milk Plant, Vinamilk has now expanded to a total of 14 factories, including 13
domestic factories spanning from the North to the South of Vietnam, and one
factory in New Zealand. Among them, 10 factories are dedicated to yogurt
production. (Vinamilk, 2023)
3.2.4 Delivery

a) Vinamilk's distribution channel

 Figure: Distribution channel of vinamilk
Source: Summary

- Retail Channel
Vinamilk heavily relies on traditional distribution channels, which account for
more than 80% of its product sales. These channels involve more than 220
distributors and over 250,000 retail points across all 63 provinces and cities in
Vietnam. Vinamilk is not limited to domestic distribution but also serves as a
leading official distributor in Thailand, Europe, Australia, and the United States.
The retail network of Vinamilk is continuously expanding, with its products
available at over 1,500 tier 1 agents, more than 5,000 small retailers, and various
sizes of supermarkets.

- Online Channel - Online Sales

In addition to traditional channels, Vinamilk introduced its e-commerce
website, giacmosuaviet.com, in 2016, along with the online shopping application
"Giac Mo Sua Viet." Vinamilk focuses on developing a modern channel through an
omnichannel shopping model to enhance convenience and cater to the growing
demand for online shopping among consumers.

- B2B Segment - Key Account Channel

 Key accounts refer to crucial customers targeted by Vinamilk, who are
typically large and important customer groups for the company. Vinamilk aims to
reach businesses and international markets through its B2B segment, which includes
more than 10,000 key account channels. These channels cater to entities such as
hotels, restaurants, schools, hospitals, and government agencies that can place
significant orders. Vinamilk's B2B distribution channel is advantageous due to its
short length and cost-saving benefits, making it the most widely used channel for
product distribution in the United States.

- Official Stores - Vinamilk Milk Stores

Vinamilk currently operates nearly 650 official stores across the country.
These stores are spread throughout Vietnam, with 132 branches in Ho Chi Minh
City, 129 branches in Hanoi, and 120 branches in provinces located in the central
region of the country. Additionally, Vinamilk's official stores can be found in
various provinces in the northern, coastal, eastern, and western regions of Vietnam.

- The success of Vinamilk's distribution channel

Vinamilk has achieved dominant market share in Vietnam's dairy industry due
to its efficient distribution channels. According to a Kantar Worldpanel report,
Vinamilk currently controls 39% of the fresh milk market in Vietnam, which is
twice as much as its closest rival. Moreover, Vinamilk's products have been
successfully exported to more than 50 countries worldwide, including regions such
as Southeast Asia, the Middle East, Africa, and other nations.
 Figure: The business effectiveness of Vinamilk from 2003 to 2022
Source: Vinamilk
Over the past 20 years, the total revenue and profit before tax (PBT) of the
leading dairy company have experienced a remarkable surge by 15 and 13 times,
respectively. When the company began its equitization process in December 2003,
Vinamilk's charter capital was only 1,590 billion Vietnamese dong. By the end of
2022, the company's market capitalization had exceeded 159,000 billion Vietnamese
dong.

b) Transportation management

- From Vinamilk to distributors

Vinamilk manages its distribution network through contracts with partners.
These distributors are located in various provinces and cities. Vinamilk will assign
business supervisors and 15 sales staff members to work directly with the
distributors. They will also provide them with Palm z222 devices to provide
continuous information about promotional programs and customer incentives. The
PDAs are used for sales and inventory management through barcode scanning. Each
distributor will have one ERP system manager responsible for receiving data from
the company and business plans from the two business supervisors to update the
system. They will also monitor the business performance of the affiliated agents and
input the information into the company's server.
 The company's sales department will obtain information about the quantity of
goods in the distributor's warehouse by scanning the barcode to determine the
appropriate product quantity to supply to the distributor.
In addition, to ensure the connection between the supplier and the customers,
Vinamilk will have transportation management personnel to classify orders and
track the delivery process. When it comes to the fixed delivery cycle, the
transportation coordinator will arrange transportation vehicles to the distributors.

- From Giacmosuaviet store to consumers

Currently, Giacmosuaviet store provides both online and offline sales services.
With the online service, after customers place orders on the website, the Customer
Care department will make confirmation calls on weekdays, from Monday to Friday
(from 9 AM to 5 PM), and on Saturday (from 9 AM to 12 AM). A valid order is one
that is successfully confirmed by the customer care staff. The delivery time is from
8 AM to 9 PM, from Monday to Saturday, for orders that have been successfully
confirmed. If the ordered products are temporarily out of stock, the system will
transfer the customer's order to another store that has the items, and the delivery
time may be extended by 2-3 days.

c) Warehouse management
- Warehouse management model
Vinamilk has built a leading smart warehouse in Vietnam, covering an area of
6000 square meters with 20 entrances and exits. The warehouse has a length of 105
meters and a height of 35 meters, consisting of 17 support levels with a capacity of
27,168 pallets. The inbound and outbound operations are automated with 15 Rail
Guided Vehicles (RGV) transporting finished pallets into the warehouse and 8
Stacker Cranes arranging the pallets on the rack system.
Vinamilk utilizes the Economic Order Quantity (EOQ) model to manage its
inventory. EOQ is the optimal quantity of units that a company should purchase to
meet demand while minimizing costs associated with holding inventory, shortages,
and ordering.
 - Warehouse management activities

Diagram: Warehouse management activities

Source: SmartBiz, 2022
 Production planning: The Production Planning Department and the Board of
Directors will create production plans based on the annual business
objectives in order to distribute the production plan to the factories.
 Materials Procurement : The Purchasing Department will create a
procurement plan based on customer orders and determine the raw materials
below the safe inventory level. Priority will be given to items that need to be
imported based on the receiving capacity and inventory strategy.
 Receiving goods from suppliers: After receiving the materials' warehouse
entry plan, the coordination department will arrange trucks to pick up the
goods from the suppliers.
 Quantity and quality inspection: Upon arrival at the factory, the security
department will inspect the initial quantity and quality to ensure compliance
with the set standards.
 Data entry into the warehouse management system: Once the standards are
met, the goods will be entered into the warehouse and undergo quantity
 checks and arrangement. At the same time, inventory data will be entered
into the system to confirm the information.

- Warehouse management at distributor locations

The distribution system utilizes the Solomon system to inventory products and
automatically calculate the quantity of goods in stock. When the quantity falls
below the safety level, purchasing orders will be generated for services and
customers. At supermarket systems, there are multiple sales supervisors and
promotional girls (PGs).
Vinamilk uses an ERP system to process inventory information, including
inventory codes, inventory arrangement, and import and export information.
Vinamilk assigns codes and categorizes inventory according to standards,
specifications, and various sizes.
When goods are shipped, Vinamilk labels them with a code consisting of
letters and numbers. The company does not use chemical names for materials but
instead labels them with the substance name to avoid errors in the production
process caused by codes.
3.2.5 Return

a) Return policy
Vinamilk is committed to ensuring customer satisfaction and aims to address
any issues that may arise during the purchasing process. Customers are advised to
inspect the condition of the goods and initiate exchanges or returns at the time of
delivery in the following cases:
 The received goods do not match the type, model, or specifications as stated
in the placed order or on the website.
 Insufficient quantity or incomplete sets compared to the order.
 External damages such as torn packaging, peeling, or breakage.
After receiving the goods, Vinamilk only accepts exchange or return requests
when customers provide a video showing the unboxing process. Vinamilk only
accepts complaints on the same day for refrigerated products and within 3 days for
regular products from the date of delivery. Customers are responsible for providing
relevant documentation to prove the deficiencies in order to complete the
return/exchange process. In the case of customer feedback or complaints related to
product quality, customers are advised to contact Vinamilk Shop's customer care
hotline for guidance and assistance.

b) Measuring the performance of Vinamilk's milk supply chain

The table showed that ROA has been decreasing over the past 4 years, from
23% in 2020 to 16.41% in 2023. This indicates that Vinamilk is becoming less
efficient at using its assets to generate profits. The decline in ROA could be due to a
number of factors, including increasing competition in the dairy industry, rising
input costs, declining demand for dairy products. Inventory turnover has been
relatively stable over the past 4 years, ranging from 46.31 in 2020 to 41.92 in 2023.
This indicates that Vinamilk is managing its inventory levels effectively.
The financial statement analysis of Vinamilk shows that the company is facing
a number of challenges, including increasing competition, rising input costs, and
declining demand for dairy products. These challenges have led to a decline in ROA
and working capital turnover. However, Vinamilk is managing its inventory levels
effectively and is reducing its risk of obsolescence.
As a result of resource constraints, we lack comprehensive information
regarding the specifics of order quantities and contract fulfillment by Vinamilk's
suppliers. However, an analysis of inventory levels indicates that Vinamilk
effectively manages its supply chain, maintaining consistent inventory numbers.
This is a positive indicator considering that Vinamilk's products are perishable and
prone to damage if not properly controlled
 Section 4: Discussions and recommendations
4.1 Discussions
From analyzing the SCOR model, Vinamilk's success in supply chain
management can be attributed to various factors, including strategic supply chain
planning, independent sourcing of raw materials, rigorous milk collection and
quality management processes, technology adoption and digital transformation, as
well as optimization of operational time through the involvement of modern
machinery. However, challenges such as increased input material costs, a multi-
tiered distribution system, management and preservation issues during
transportation and distribution channels, and pressure from competitors, particularly
foreign dairy products, have impacted the company's profitability and working
capital turnover.
4.2 Recommendations
To overcome these current limitations and ensure the efficiency of the supply
chain, the authors propose several solutions:
Firstly, Vinamilk should review and standardize its extensive network of
distributors to streamline operations, which although advantageous, poses
difficulties in management and product pricing optimization. Additionally,
alongside eliminating non-standard distribution agents, especially in preservation
and marketing, the company should regularly evaluate and supplement new retail
points promptly to ensure coverage. This helps limit situations where customers in
that area may switch to purchasing products from competing brands.
Secondly, the company should continue to enhance and leverage its existing
information technology system, particularly by swiftly optimizing the
implementation of Electronic Data Interchange (EDI) technology for data exchange.
The secure storage system of EDI ensures data safety, enabling the company to
track the goods' journey at each stage. Data automation in the supply chain helps
reduce errors in various process stages (ordering, contract drafting, invoicing) and
accelerates transaction speeds with partners and customers.
 Thirdly, despite Vinamilk's current adoption of three international ERP
solutions from Oracle, SAP, and Microsoft, the company needs to focus on
optimizing data retrieval time due to integrating three systems running on different
platforms. This will help enhance the intelligent reporting system, providing top
management with accurate and real-time information on the nationwide supply
network's operations.
Conclusion
References