Supply chain management in haiha confectionery joint stock company

There are two important measures, however, that are not explicitly part of a firm’s financial statements: markdowns and lost sales: - Markdowns: discounts required to convince customer

UNIVERSITY OF ECONOMICS FACULTY OF BUSINESS ADMINISTRATION

MODULE PRESENTATION REPORT

SUPPLY CHAIN MANAGEMENT

SUPPLY CHAIN MANAGEMENT IN HATHA CONFECTIONERY JOINT STOCK COMPANY

Instructor guides : PGS.TS Nguyễn Phúc Nguyên

Đà Nẵng, 09/2023

CONTENT

LIST OF TABLES - con cm mm mm mm mm 6 CHAPTER 1 THEORY na 7 1.1 UNDERSTANDING THE SUPPLY CHAIN - .-⁄5-5 5-52 S5 7

II N0 0T ®šàn 7 1.1.2 Why do we have to learn Supply Chain Manaseement? 7 1.1.3 How many flows are in one supply cha1n? - 2: 2c 22s ssscs>s 8 1.1.4 How many approaches to manasing a supply chatn? - - 9 1.2 SUPPLY CHAIN DRIVERS AND METRICS - 2222222222 9 1.2.1 Describe key financial measures of firm performanee - 9

1n 9 — Ả 9 L212 ROA 9

CHAPTER 2 SUPPLY CHAIN AT HAI HÀ CONFECTIONERY

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2.1.4 Vision and Misslon, Core VaÌues - c1 HH n2 S211 11111121114 19 2.1.5 Business lines, products c1 n2 212 TH 1111111211181 kg 19 2.2 The Supply Cham 2 0 22 122122211211 121 111111111111 21 11811111118 11kg 21 QQ Direct .Aa aãaã¬ãa 21

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2.3.2 The major drivers of supply chan performanee : s52: 31 P VN vn 31

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2.3.3 The role of each driver in creating fit between the supply chain

strategy and competitive strategy ccc c2 S212 2122111 rey 36

REFERENCES nu nha 39

LIST OF IMAGES

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Picture 2: Haiha Confectionery Joint Stock Company in Bac Ninh 17

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Picliure 5: HAIHACO? Suppl C haiH IOdÏ ch HH re 21 Picture 6: Hai Ha Confectionery Joint Stock Company (HHC) inaugurated a new factory in VSIP Industrial Park - Bac NIHỈ ảnh ớg 23 Picture 7: product distribution system at HA ILHA(CO à cà s se 25 Picture 8: An example of a retailer displaying products during the Mid-Autumn PeStIVA ec ceccecccceesecseneeteesensenenscneeseseneseecseeeneesceesecisessnesensneeaesaseesneseesesnennentes 25 Picture 9: Tet-themed cake box Offerings cccccccccccccccsctsscestestteeeseenstenteeeetseees 29 Picture 10: The company's offerings of MOONCAKES 0 ccccccctte ttt tttetteetnes 30 Picture 11: ROE, and ROA of Hai Ha Company in period 2020 - 2022 30

Picture 12: Profit Margin of Hai Ha from 2020 10 2022 sòc S2 2552 32 Picture 13: Within the confectionery manufacturing facility of HAIHACO 33

Picture 14: The factory's Bac Ninh-based raw material storage facility 35

LIST OF TABLES

CHAPTER 1

Table 1: C-2-C of Hai Ha from 2020 10 2022 ceccccciccciitititetienistneetneeen 31

500/22, 2anjnr 0i n0 2n ốe 32 1able 3: Tụo sirategies have correspondling supDly chain sirategies 37

Table 4: Prices of some HaiHa's products with products in the same market

segment from OLheF' COIHDQHHÌCS TH HH HH 1 11H ng HH HH 37

lable 5: Price for traditional mooncake line in HAIHACO and in competitor 38

CHAPTER 2 THEORY 2.1 UNDERSTANDING THE SUPPLY CHAIN

2.1.1 What is a Supply Chain?

A supply chain consists of all parties involved, directly or indirectly, in

fulfilling a customer request The supply chain includes not only the

manufacturer and suppliers, but also transporters, warehouses, retailers, and even customers themselves Within each organization, such as a manufacturer, the

supply chain includes all functions involved in receiving and filling a customer

request These functions include, but are not limited to, new product development, marketing, operations, distribution, finance, and customer service

A typical supply chain may involve a variety of stages, including the following:

- Customers

- Retailers

- Wholesalers/distributors

- Manufacturers

- Component/raw material suppliers

2.1.2 Why do we have to learn Supply Chain Management?

Relevance to business operations: SCM is important for understanding how businesses manage the flow of goods and services from raw materials to the

final consumer This knowledge is very important for businesses because it

directly affects the company's performance and profits

Globalization: In today's globalized economy, businesses often source raw materials and sell products across international borders SCM helps navigate the complexities of international trade, logistics and supply chain networks

Cost Management: SCM involves optimizing procurement, production and distribution processes to minimize costs Cost is one of the extremely important factors in supply chain management To be able to operate the supply chain in the best way, cost management will also be an issue that needs to be best resolved

Customer satisfaction: Effective supply chain management ensures that

products are available when and where customers want them Satisfied customers

are more likely to become repeat buyers, which is a fundamental goal of a business

Risk management: Supply chains can be susceptible to various risks, such

as supply disruptions and demand fluctuations Learning to manage and mitigate these risks is essential for business resilience

Competitive advantage: An efficient supply chain can be a source of

competitive advantage Students studying SCM can learn how to create value for

a company by differentiating that company's supply chain processes from those

of its competitors

After a period of working in the field of research, development and

production of confectionery, Hai Ha has now built its own system with many different confectionery products to meet the needs of customers best demand for confectionery products

2.1.3 How many flows are in one supply chain?

Cash flow: This is a financial-related movement within the supply chain

It includes all payment activities such as the purchase of raw materials between a supplier and a manufacturer, or the final product between a retailer and a customer At the same time, financial invoices are established between different trading partners operating in the supply chain through negotiation and payment

terms

Demand line:

- This is a movement flow related to the needs of the final customer

in the supply chain

- This flow will include activities such as analyzing data, purchasing trends, and customer preferences to ensure that goods can be met to meet customer needs at the right time, at the right time quantity and right location

- This activity also plays an important role in meeting consumer

demand, as well as supply chain efficiency By understanding customer needs,

goods can be produced in the right quantities, avoiding problems related to out- of-stock or inventory of goods

2.1.4 How many approaches to managing a supply chain?

Push pipeline: With push pipeline, execution is initiated in anticipation of

customer orders based on the forecast Push processes can also be considered speculative processes because they respond to inferred (or forecasted) needs, rather than actual needs The push process operates in an uncertain environment because customer demand is unknown

Pull Process: With a pull process, execution 1s initiated in response to a customer request Pull processes can also be called reactive processes because they react to customer needs The pull process operates in an environment of knowing the customer's needs However, they are often constrained by inventory and capacity decisions made during the push phase

2.2 SUPPLY CHAIN DRIVERS AND METRICS

2.2.1 Describe key financial measures of firm performance

2.2.1.1 ROE From a shareholder perspective, return on equity (ROE) is the main summary measure of a firm’s performance ROE measures the return on investment made by a firm’s shareholders

Net Income ROE SHH

Average Shareholder Equity

¿ Net Income BeginShareholder Equity + End Shareholder Equity

2

ROE indicates how effectively a business uses shareholder equity ROE

will be compared with historical values and with the industry average ROE index

- this helps viewers fully visualize the organization's profitability and investment performance

2.2.1.2 ROA Return on assets (ROA) measures the return earned on each dollar invested by the firm in assets

_ Earning before interest ROA

Average Total Assets

¿ Earning before interest Begin Total Assets + End Total Assets

2

2.2.1.3 APT

An important ratio that defines financial leverage is accounts payable

turnover

T= Costsof Goods Sold

~ Average Accounts Payable

¿ Costs of Goods Sold Begin Accounts Payable+ End Accounts Payable

2

There, accounts payable are listed on the balance sheet as short-term liabilities

The smaller the APT, the more it shows a significant portion of the financial leverage came from accounts payable It can help businesses reduce capital costs and at the same time demonstrate the reputation of payment

relationships with suppliers However, if the APT index is too small (large

accounts payable), there will be potential risks to liquidity

2.2.1.4 Profit margin, asset turnover ROA can be written as the product of two ratios — profit margin and asset

turnover:

Earning before interest , Sales Revenue

ROA= Sales Revenue Total Assets

é Profit Margin x Asset Turnover Thus, a firm can increase ROA by growing the profit margin and/or

increasing the asset turnover The key components of asset turnover are accounts

receivable turnover (ART); inventory turnover (INVT); and property, plant, and

equipment turnover (PPET) These are defined as follows:

PPAE

PPET=

A company can improve its asset turnover by turning its inventory more quickly or using its existing warehousing and technology infrastructure to support a higher level of sales (or decreasing the warehousing and technology

infrastructure needed to support the existing level of sales) A company can improve its profit margin by increasing a customer’s willingness to pay or decreasing operating expenses

2.2.1.5 C-2-C Another useful metric 1s the cash-to-cash (C2C) cycle, which roughly

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

1 C2C=— Weeks Payabl eeks Payable ( T + Weeks € Inventor *Í TT 1

A decreasing or stable trend i C-2-C values over time is a good sign, while increasing trends will result in more testing and analysis based on other factors

There are two important measures, however, that are not explicitly part of

a firm’s financial statements: markdowns and lost sales:

- Markdowns: discounts required to convince customers to buy excess inventory

- Lost sales: represent customer sales that did not materialize because of the absence of products the customer wants to buy

Both markdowns and lost sales reduce net income and arguably represent the biggest impact of supply chain performance on the financial performance of a firm

2.2.2 Identify the major drivers of supply chain performance

2.2.2.1 Facilities Facilities in the supply chain network encompass physical locations for storing, assembling, or fabricating products There are two primary types: production sites and storage sites Decisions on their roles, locations, capacities, and adaptability significantly influence supply chain performance Facility costs are recorded under property, plant, and equipment if owned by the firm, or under selling, general, and administrative if leased

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1 Weeks R ble |——

)+ Weeks Receivable ( 7)

Facility-related decisions affect a company's financial performance and its

ability to respond to customer needs These decisions influence costs (cost of

goods sold) and assets (property, plant, equipment) To assess supply chain

performance, managers should monitor key facility-related metrics:

- Capacity measures the maximum amount a facility can process

- Production cost per unit measures the average cost to produce a unit of output These costs may be measured per unit, per case, or per pound depending on the product

- Quality losses measure the fraction of production lost due to defects Quality losses hurt both financial performance and responsiveness

- Product variety measures the number of products/product families processed in a facility Processing costs and flow times are likely to increase with product variety

- Average production batch size measures the average amount

produced in each production batch Large batch sizes will decrease production

cost but increase inventories

- Production service level measures the fraction of production orders completed on time and in full

influence supply chain performance:

- Cash-to-cash cycle time is a high-level metric that includes

inventories, accounts payable, and receivables

- Seasonal inventory measures the difference between the inflow of product (beyond cycle and safety inventory) and its sales that are purchased

solely to deal with anticipated spikes in demand

- Obsolete inventory measures the fraction of inventory older than a specified obsolescence date

- Average inventory measures the average amount of inventory carried Average inventory should be measured in units, days of demand, and financial value

- Inventory turns to measure the number of times inventory turns over in a year It is the ratio of average inventory to either the cost of goods sold

or sales

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- Average safety inventory measures the average amount of inventory

on hand when a replenishment order arrives Average safety inventory should be measured by SKU in both units and days of demand It can be estimated by averaging over time the minimum inventory on hand in each replenishment cycle

2.2.2.3 Transportation

Transportation in the supply chain involves moving inventory between

points It utilizes various modes and routes, each with unique performance traits These choices significantly affect supply chain responsiveness and efficiency Outbound shipping costs to customers are usually part of selling, general, and administrative expenses, while inbound transportation costs are typically integrated into the cost of goods sold

Inbound transportation decisions affect the cost of goods sold, while outbound transportation costs are included in selling, general, and administrative

expenses, impacting profit margins To gauge supply chain performance, managers should monitor key transportation-related metrics:

- Average inbound transportation cost typically measures the cost of bringing product into a facility as a percentage of sales or cost of goods sold

(COGS) Ideally, this cost should be measured per unit brought in, but this can be difficult The inbound transportation cost is generally included in COGS It is useful to separate this cost by supplier

- Average incoming shipment size measures the average number of

units or dollars in each incoming shipment at a facility

- Average inbound transportation cost per shipment measures the average transportation cost of each incoming delivery Along with the incoming shipment size, this metric identifies opportunities for greater economies of scale 1n inbound transportation

- Average outbound transportation cost measures the cost of sending

product out of a facility to the customer Ideally, this cost should be measured per

unit shipped, but it is often measured as a percentage of sales It is useful to

separate this metric by customer

- Average outbound shipment size measures the average number of

units or dollars on each outbound shipment at a facility

- Average outbound transportation cost per shipment measures the average transportation cost of each outgoing delivery Along with the outgoing shipment size, this metric identifies opportunities for greater economies of scale

in outbound transportation

2.2.2.4 Information

Information in the supply chain includes data and analysis related to

facilities, inventory, transportation, costs, prices, and customers It's a key driver

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of supply chain performance, impacting all other aspects Information empowers management to enhance supply chain responsiveness and efficiency Expenses related to information technology are usually categorized under operating expenses, often found in selling, general, and administrative expenses, or as

- Frequency of update identifies how frequently each forecast is

updated The forecast should be updated somewhat more frequently than a decision will be revisited, so that large changes can be flagged and corrective action taken

- Forecast error measures the difference between the forecast and actual demand The forecast error is a measure of uncertainty and drives all responses to uncertainty such as safety inventory or excess capacity

2.2.2.5 Sourcing

Sourcing is the choice of who will perform a particular supply chain

activity such as production, storage, transportation, or the management of information At the strategic level, these decisions determine what functions a

firm performs and what functions the firm outsources Sourcing decisions affect

both the responsiveness and efficiency of a supply chain Sourcing costs show up

in the cost of goods sold, and monies owed to suppliers are recorded under accounts payable

Sourcing decisions have a direct impact on the cost of goods sold and accounts payable Source performance also affects quality, inventory levels, and inbound transportation costs Managers should monitor specific sourcing-related metrics to assess their influence on supply chain performance:

- Days payable outstanding measures the number of days between when a supplier performed a supply chain task and when it was paid

- Average purchase price measures the average price at which a

good or service was purchased during the year The average price should be weighted by the quantity purchased at each price

- Average purchase quantity measures the average amount purchased

per order The goal is to identify whether a sufficient level of aggregation is occurring across locations when placing an order

- Supply quality measures the quality of the product supplied

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- Supply lead time measures the average time between when an order

1s placed and when the product arrives Long lead times reduce responsiveness and add to the inventory the supply chain must carry

2.2.2.6 Pricing Pricing sets the cost for goods and services in the supply chain, influencing buyer behavior and overall supply chain performance Differential

pricing balances responsiveness for some customers and lower costs for others Changes in pricing affect revenue directly and can impact costs through other drivers

Pricing directly impacts revenues and can also affect production costs and inventories depending on its effect on consumer demand Managers should monitor specific pricing-related metrics, especially in menu pricing, where each

segment should be tracked separately

- Days sales outstanding measures the average time between when a sale is made and when the cash is collected

- Incremental fixed cost per order measures the incremental costs that are independent of the size of the order These include changeover costs at a

manufacturing plant or order processing or transportation costs that are incurred

independent of shipment size at a mail-order firm

- Incremental variable cost per unit measures the incremental costs that vary with the size of the order These include picking costs at a mail-order

firm or variable production costs at a manufacturing plant

- Average sale price measures the average price at which a supply chain activity was performed in a given period The average should be obtained

by weighting the price with the quantity sold at that price

- Average order size measures the average quantity per order The average sale price, order size, incremental fixed cost per order, and incremental

variable cost per unit help estimate the contribution from performing the supply

chain activity

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CHAPTER 3 SUPPLY CHAIN AT HAI HA CONFECTIONERY

JOINT STOCK COMPANY

Authorized capital: 164,250,000,000 VND (in 2022)

Equity: 562,538,934,518 VND (in 2022)

Address: 25 — 27 Truong Dinh, Hai Ba Trung, Hanot

Website: http://www.hathaco.com.vn

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3.1.2 History

a | ee ae

Picture 2: Haiha Confectionery Joint Stock Company in Bac Ninh

On December 25, 1960, the Company was established with the original

name Hoang Mai Vermicelli Factory

In June 1970, according to the instructions of the Ministry of Food and

Foodstuffs (now the Ministry of Industry and Trade), the factory received the handover of Hai Chau's candy factory The factory changed its name to Hai Ha Food Factory

In 1987, Hai Ha Food Factory changed its name to Hai Ha Export Candy Factory and became affiliated with the Ministry of Agriculture and Food Industry

On July 10, 1992, Hat Ha Export Candy Factory changed its name to Hai

Ha Confectionery Company according to Decision No 537/CNN-TCCB of the Ministry of Light Industry, marking a new development step for Hai Ha not only

narrowed in production but also moved into business fields suitable for the

In 2007, the company was approved to list shares at Hanoi Stock

Exchange Center according to Decision No 312/QD-TTGDHN dated November

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8, of the Director of Hanoi Stock Exchange Center and has officially been trading since 20 November 2007

In May 2011, the Company completed the issuance of shares to increase charter capital from VND 54.75 billion to VND 82.125 billion

In 2017, the company successfully relocated the entire production area In Hanoi to VSIP Bac Ninh Industrial Park and installed 02 new cake production lines In March, the Company had a major change in Its organizational model because Vietnam Tobacco Corporation divested all state capital and converted to

a Joint stock company with 100% private capital

In 2018, On January 20, Hai Ha Confectionery Joint Stock Company inaugurated Hai Ha Confectionery Factory at VSIP Industrial Park - Phu Chan Commune, Tu Son Town, Bac Ninh Province

In 2022, The company continued to record record revenue of over 1,500

billion VND

3.1.3 Achievements

4 Third Labor Medals (1960 - 1970)

1 Second Labor Medal (1985)

1 First Labor Medal (1990)

1 Third Independence Medal (1997) Voted "High-quality Vietnamese goods" for 20 consecutive years from

1997 — 2016

Certificate of Merit from the Prime Minister in 2010

Products of HAIHA Confectionery JSC were awarded gold, and silver

medals in the international exhibition about Vietnam’s industrial goods, national

economics exhibition, and engineering economics one in Vietnam

Others:

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= a]

Vision: Bringing Hai Ha confectionery products to all parts of the

country and around the world

Mission: Hai Ha Confectionery 1s committed to bringing satisfaction to partners and customers with quality products; Bring maximum benefits to customers, shareholders and society as a whole

Core Values: Always unite, innovate, be dynamic, creative, and effective

to achieve the goal of "Overcoming all difficulties, moving steadily forward, enhancing the position of the Hai Ha brand"

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3.1.5 Business lines, products

HAIHACO develops a variety of product lines such as: Cakes; Cookies and Crackers; Moon cake; hard candies and soft candies; Fresh cakes and Tet Jam,

HAIHACO's key products such as Chew candy, Jelly candy, Sozoll custard cookies, Long Pie soft cakes,

Mercury egg cake, Miniwaf sponge cake, Moon cake,

Kẹo sữa GoodMIlk Kẹo cứng & mềm

Keo Jelly Chip Chip

os

Picture 4: Products of HAIHACO

3.2 The Supply Chain

Raw material Sugar Manufacturers

*Milk ®3 main production

*Wheat flour factories

Picture 5: HAIHACO's Supply Chain model

3.2.1 Direct

3.2.1.1 Supplier Every year the company produces and sells a large volume of confectionery, so there 1s high consumer demand for sugar and milk, flour, essential oil flour, glucose, yeast Meanwhile, the domestic market can only supply raw materials such as sugar, rice flour, wheat flour, and yeast from Lam Son, Quang Ngai factories, Cai Lan company, and Vietnam dairy company

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