Group 3 - Evaluate logistics activities of Vinamilk

Development history Established in 1976, Vinamilk Company is known as “Sữa – Cà phê miền Nam Company”, which is under General Department of Food, including 4 factories in the food proce

INDEX

CHAP 1: INTRODUCTION ABOUT VINAMILK 2

1 Development history 2

2 The main products 4

CHAPTER 2: LOGISTICS AND SUPPLY CHAIN SYSTEM 6

1 Inbound logistics 6

1.1 Supply 7

1.2 Transportation Process 11

1.3 Warehouses 13

1.4 Storage 13

2 Operation 14

3 Outbound logistics 17

3.1 Packaging products of Vinamilk 17

3.2 Finished goods transportation and warehousing activities 19

3.3 Structure of distribution channels 22

3.4 Ordering and Process to order 27

3.5 Customer care 27

CHAPTER 3: EVALUTATE 31

1 Strength 31

2 Opportunities 33

3 Weakness 34

4 Threaten 36

CHAPTER 4: COMPARISON 37

CHAPTER 5: SOLUTION 39

CHAP 1: INTRODUCTION ABOUT VINAMILK

1 Development history

Established in 1976, Vinamilk Company is known as “Sữa – Cà phê miền Nam Company”, which is under General Department of Food, including 4 factories in the food processing industry:

- Thong Nhat dairy factory

- Trường Thọ dairy factory

- Dielac dairy factory

- Bien Hoa Coffee Factory

In 1982, Southern Milk and Coffee Company was transferred to the Ministry of Food Industry and changed its name to Enterprise of Milk Union - Coffee-Confectionery I

In 1989, the Milk-Coffee Union-Confectionery Enterprise only had 3 affiliated factories:

- Thong Nhat dairy Factory

- Truong Tho dairy Factory

- Dielac dairy Factory

In March 1992, the Milk-Coffee-Confectionery I enterprise officially changed its name to Vietnam Dairy Company (Vinamilk) - under the Ministry of Light Industry, specialized in manufacturing and processing milk and other products from milk

In 1994, Vietnam Dairy Company (Vinamilk) built a new dairy factory in Hanoi to develop the market in the North, bringing the total number of affiliated factories to 4;

- Thong Nhat Dairy Factory

- Truong Tho Dairy Factory

- Dielac Dairy Factory

- Hanoi Dairy Factory

In 1996, Binh Dinh Dairy Joint Venture Enterprise in Quy Nhon was born, contributing to facilitate Vinamilk products to serve the temples of the Central region

In 2000, the Company built more:

- Can Tho Dairy Factory

2009: Vinamilk built the second dairy farm in Nghe An

2010: Vinamilk built the 3rd and 4th dairy farms in Thanh Hoa and Binh Dinh From

2005-2010, Vinamilk applied new technologies, installed modern machinery and equipment for all factories in the group In addition, Vinamilk also established health nutrition counseling centers across the country to produce more than 30 new products Also in 2010, Vinamilk invested in New Zealand with a company specializing in the production of whole milk powder with a capacity of 32,000 tons / year In addition, Vinamilk also invests in the US and opens more factories in many countries, export turnover accounts for 15% of revenue and is still rising

In 2011: Vinamilk built the 5th dairy farm in Lam Dong, bringing the total number of cows

to 5900

2012: Inaugurated Da Nang dairy factory, Lam Son dairy factory, Vietnam beverage factory with many modern production lines originating from the US, Denmark, Germany, Italy and the Netherlands

2013: Inaugurated the super Binh Duong dairy factory, one of the world's leading modern factories, 100% automated on an area of 20 hectares in My Phuoc 2 industrial zone

2 The main products

The current network of Vinamilk at the moment

CHAPTER 2: LOGISTICS AND SUPPLY CHAIN SYSTEM

1 Inbound logistics

Hồ Chí Minh city

Hà Nội

VietNam

New Zealand

Quang Ngai Sugar JSC

Local farmers

Vinamilk’s farms

Packages: Tetra Pak Planes

1.1 Supply

Building long-term and sustainable development goals with major domestic and foreign strategic suppliers is the main goal of Vinamilk to ensure the supply of raw materials which

is not only stable in high quality but also in competitive price

The process of input supplying of Vinamilk dairy company includes: imported materials, machine and raw materials purchased from cow farmers, domestic cattle farms and other auxiliary materials

2014: Vinamilk has to import about 65% of milk powder materials to produce milk, domestic materials only meet 35%

1.1.1 Domestic ingredients

Fresh milk

Since 2006, Vinamilk has started to invest in dairy farming directly through the construction of industrial dairy farms Up to the present time Vinamilk has 7 breeding farms, now Vinamilk's farms are invested by more than 6000 dairy cows, bringing the total number of dairy cows to 45,000 Moreover, one of the studies has shown that cows which are happy tender good care Vinamilk follows and applies that guideline for the process of taking care of their cows The cows on Vinamilk farm are fed with nutritious ration In addition, Vinamilk provides modern and high – standard breeding facilities Therefore, a cow can produce 24 liters per day and the total production of a farm reach nearly 110 tons per day

They not only use milk from their farms, but they also buy milk from farmers farming land The milk has to go through an arduous checking process in order to reach quality’s standard which have been signed Collecting center plays an important role in buying milk from farmers, measuring amount, checking quality of standards, preserving and delivering milk

to their factories Farmer can be informed of factories’ demand and their requirements of quality and price Vinamilk pays to farmer at once

a NgheAn Dairy Cow Farm

It is a farm of nearly 50 hectares in Dong Hieu commune, Thai Hoa town, NgheAn province The farm is divided into 2 zones: 15 ha for barns and ancillary works, the remaining 35 hectares are high-yield production areas that are suitable for dairy farming The farm has a size of 3500 cows which are the same type of HF cattle imported from Australia and New Zealand In addition to the quality of the breed, to have a pure fresh milk source, the cow's diet is also mixed with the optimal nutrient ratio

There are about 1500 cow to milk, a dairy cow here probably squeezes 22 liters of fresh milk, equivalent to 22 kg, even has good milk for up to 40 l / day Thus, the farm provides

30 tons of milk on average The entire Delaval automatic milking line will help the cow's milk flow straight into the rapid cooling system from 37 degrees C to 4 degrees C, making sure the milk is best preserved before being taken to Vinamilk's dairy factory in Nghe An

b Tuyen Quang dairy cow farm

Tuyen Quang dairy farm is the Phu Lam dairy farm (Yen Son, Tuyen Quang) which was bought by Vietnam Dairy Products Joint Stock Company in December 2006, with the number of 2000 cows for which 50 % of cows are giving milk The average milk yield is

550 tons per month, currently the average quantity of each cow reaches 22 kg / day, the annual milk yield of Tuyen Quang dairy farm reaches over 6100 tons In order to ensure green food for the herd, in addition to 6 ha of VA-06, self-cultivation of the grass, Tuyen Quang dairy farm also has contracts with local farmers Vinamilk always assessed that Tuyen Quang dairy cow farm has the highest milk yield and quality, which is the main supplier of Tien Son Dairy Factory, Bac Ninh

c Thanh Hoa dairy cow farm

With an area of about 34.3 ha, Thanh Hoa dairy farm provides a certain amount of milk for Vinamilk's milk factory in Nghe An The construction scale consists of 4 houses, 2 houses for special cows, 1 milking house with 2 modern extractors, 1 food processing area, warehouse, compost tank, office area and other functional areas , to meet the requirements

d Binh Dinh dairy cow farm

With an area of 52 hectares of farm in Nhon Tan commune, holding 1,000 cows, of which

400 are milking, with more than 7 tons of fresh milk / day at the moment

e Lam Dong dairy cow farm

In 2011, building the 5th dairy farm in Lam Dong, raising the total number of cows to 5900 The farm owned nearly 100 cows with more than 50 breeding cows, 15 cows 9-12 months old and 18 hectares of grassland The farm produces about 1 ton of milk / day Recently, Lam Dong Provincial People's Committee and Vinamilk Company have just signed a contract about the cooperation in developing dairy farming in the period 2015-2020, in order to make Lam Dong become one of the major dairy material areas High quality Specifically, through this campaign, Lam Dong province facilitates Vinamilk to build from

2 to 3 dairy farms with a total of about 10,000 cows

f Tay Ninh dairy cow farm

In December 2013, Tay Ninh Department of Planning and Investment issued a license to operate Tay Ninh dairy farm, a farm of 8000 dairy cows was reached in Ben Cau district, Bac Ninh province

g Ha Tinh dairy cow farm

In March 2018, dairy farm No 7 in Vinamilk's international standard farm system has been built and put into operation The first farm in Vietnam to import American high-yielding cow breeds, which is 20% higher than conventional dairy cows This is the leading farm in using the world's leading machinery and technology application in the process of raising dairy cows with an investment of 300 billion VND and a capacity of 3000 cows /year

h Local farmers

Fresh milk is a special product, requiring that the procurement method must also meet the quality assurance and food hygiene and safety standards Fresh milk from local farmers is quickly brought to the raw milk transfer stations At the transfer station, the factory's product quality control officers will conduct analytical tests Satisfactory milk is taken and stored in storage tanks at the transfer station Samples of milk were encoded before being transferred to the factory laboratory for analysis of indicators Sample inspections at the transfer station and sampling to the factory were conducted in the presence of dairy farmers These analyzes are performed on an automated machine system With equipping modern machines, Vinamilk can detect and prevent most cases of adding strange substances to milk

if available Every day Vinamilk buys over 400 tons of fresh cow's milk material from many provinces in the country with a value of about 1.8 billion VND In addition, when the Miraka-New Zealand factory was officially put into operation in September 2010, Vinamilk also purchased fresh milk from farmers in the Taupo area of New Zealand's North Island

1.1.2 Imported Materials

a Cows

Most cows in Vinamilk's farms are imported from famous cow suppliers in the world such

as Australia and the US In 2014, the Company imported 1,679 Australian cows and was transported by special muscle to ensure the health of cows when coming to Vietnam

b Machine, equipment

center

Dairy Factories

Vinamilk uses modern production and packaging technology for all factories The company has imported technology from European countries such as Germany, Italy and Switzerland

to apply to the production line and Vinamilk is also the only company in Vietnam owning machinery systems using technology provided by Niron of Denmark, the world leader in industrial drying and manufacturing technology In addition, Vinamilk also uses international standard production lines supplied by Tetra Park to create dairy products and other value-added products

c Ingredients

Fonterra (SEA) Pte Ltd Powdered Milk

Hoogwegt International BV Powdered Milk

Perstima Binh Duong Steel Case

Tetra Pak Indochina Paper Packaging

1.2 Transportation Process

Vinamilk also uses a variety of other types of transport such as airways, railways and roads

of domestic and foreign suppliers

At the ranches, the raw cow's milk after being squeezed is quickly brought to the cold storage system within an hour Then follow the pipe into the tank The quality of raw milk

is also tested similar to that of fresh milk from local farmers

Fresh milk from the dairy farmers after being squeezed is quickly taken to the nearest transfer station At the moment, Vinamilk has 86 transfer stations arranged according to dairy cow breeding areas Transfer stations are responsible for preserving and transporting milk in accordance with the annual contract regulations with Vinamilk At the transfer station, the factory's quality control officers will conduct analytical tests These tests are carried out regularly on each milk acquisition in the morning and in the afternoon Qualified fresh milk will be sampled and put in a cold storage tank at the transfer station Milk samples were coded with symbols and sealed before moving to the factory laboratory to analyze the indicators

After the raw milk cow's milk is cooled to less than or equal to 4 degrees Celsius, milk will

be used by specialized tankers to receive and transport to the factory The transfer stations must appoint representatives to escort vehicles to ensure absolute safety in terms of quantity and quality of milk during transport Tank trucks are checked periodically and unexpectedly, always ensuring conditions for when transporting to the factory, the milk temperature is less than 6 degrees Celsius When the car arrives at the factory, QA staff

Milk from local farmers Milk is contained in a

30 -50 ml bottle Manual shipping

Collecting center (test quality and squeeze milk) Dairy Factory

Vinamilk farm Milk is stored in cold storage tanks Transported by tank trucks

conduct quality checks: boil to representative drinking stations Milk is eligible for new receiving and weighed and pumped into the tank

Warehouse in Ho Chi Minh City is located advantage for distributing products to Ho Chi Minh City, Dong Nai and Binh Duong This warehouse is divided into 2 areas: products area and materials area In the case of warehouse reaches the maximum capacity Vinamilk will prioritize storing finished products and renting out-of-storage to store raw materials Thanks to drive – in and drive – through system, raw materials and products has been stored effectively

The process takes place in the factory very smoothly: dozens of cold tank trucks transport raw milk to the factory The station for receiving raw milk here is capable of receiving 80 tons of fresh milk per hour

Fresh milk when flowing through automatic measuring and measuring equipment, will be poured into 3 cold tank system, each tank has a capacity of 150 m3 This is the largest storage tank system in Vietnam nowadays

1.4 Storage

- How to arrange materials in stock; classify materials according to Pareto analysis method

to arrange suitable stock

- Equipment used in warehouses: pallets, shelves, shelves, sacks, specialized containers for storing cow's milk

- Main materials in stock: pure cow's milk, powdered milk, refined sugar, powdered whey, flavorings and synthetics

- Management standards:

+ Imported materials must meet standard quality before warehousing

+ Class A goods are arranged in the best places, easy to manage, goods of grades B and C are arranged later

+ Raw materials such as fresh milk are stored at the right temperature to avoid deterioration

- Management method: regularly

- Storage cycle: 1 month / 1 time for materials used long term and 1 week / time for important goods

- Person in charge of management: owner and leader of production

- Management documents: by file and pape

2 Operation

Currently, manufacturing plants of Vinamilk includes:

1/ Thong Nhat Dairy Factory- 12 12 Dang Van Bi, Thu Duc District, Ho Chi Minh City

2/ Truong Tho Dairy Factory -

32 Dang Van Bi, Thu Duc District, Ho Chi Minh City

3/ Dielac Dairy Factory - Bien Hoa Industrial Zone 1, Dong Nai

4 / Can Tho Dairy Factory - Tra Noc Industrial Zone, Can Tho

5 / Saigon Dairy Factory - Tan Thoi Hiep Industrial Park, District 12, HCMC

6 / Nghe An Dairy Factory - Sao Nam Street, Nghi Thu Commune, Cua Lo Town, Nghe

An Province

7 / Binh Dinh Dairy Factory - 87 Hoang Van Thu, Quang Trung Ward, Quy Nhon City, Binh Dinh

8 / Vietnam Beverage Factory - My Phuoc Industria Zone 2, Binh Duong Province

9 / Tien Son Dairy Factory - Tien Son Industrial Zone, Bac Ninh Province

10 / Da Nang Dairy Factory - Hoa Khanh Industrial Zone, Da Nang City

11 / Vietnam Powdered Milk Factory - 9 Tu Do Boulevard - Vietnam-Singapore Industrial Zone, Thuan An District, Binh Duong Province

12 / Vietnam Dairy Factory - My Phuoc Industrial Zone 2, Binh Duong Province

The image describes logistics and supply chain of Vinamilk

Vietnamese Dairy Factories have sterilized fresh milk production line with Modern equipment and advanced production technology nowadays

The factories operate on an automatic and self-contained chain, from raw material input to product output

After being checked for quality by measuring equipment, fresh milk will be imported into the cold storage system (150 m3 / tank)

From cold storage tanks, raw milk will be processed through: centrifugation, assimilation, pasteurization, cooling down to 4oC and transfered to storage ready for UHT sterilization processing Centrifuge, helps eliminate 99.9% of bacteria in raw milk, this is the new technology of the world and Vinamilk is the only company in Vietnam which uses this

Assimilation process:

Purpose: To prevent phase separation of fat that occurs during milk fermentation and to increase product consistency The assimilation process of milk will affect the Micelle structure in milk and improve the gel structure of milk

Pasteurization process

UHT sterilization: Advanced sterilization system heats the milk up to 140oC, then the milk

is quickly cooled to 25oC, keeps the natural flavor and nutrition, vitamin & mineral components of the product The milk is then transferred to the sterile tank and awaits sterile filling into the sterilized packaging

UHT sterilization system

Thanks to a combination of features: advanced processing technology, UHT sterilization technology and aseptic filling technology, the product can retain fresh flavor for 6 months without preservatives

Filling machine system:

Automatic milk filling system has a capacity of approximately 40,000 to 40,300 boxes per hour Vinamilk uses the fermentation materials of world-renowned partner CHR Hansen Denmark

The system operates based on Tetra Plant Master automation solution, allowing connection and integration of the entire plant from raw materials to finished products Therefore, the factory can control all activities in the factory, monitor and control the quality continuously

Tetra Plant Master system also provides all the necessary data to help the factory continuously improve production and maintenance

In addition, the Wamas warehouse management system integrates the ERP management system and the Tetra Plant Master automation solution to create seamless plant operations including production planning, importing raw materials and finishing the products of the whole company

3 Outbound logistics

3.1 Packaging products of Vinamilk

HIGH - GRADE FRESH MILK TWIN COWS -

Product of Vinamilk, import from New Zealand CARTON-BOX 1L

Vinamilk 100% Fresh Milk Plain

CARTON BOX 1L, CARTON BOX 180ml

Vinamilk 100% Fresh Milk Sweetened

CARTON BOX 1L, CARTON BOX 110ml and180ml

Vinamilk 100% Fresh Milk Strawberry Flavor and

VINAMILK UHT MILK SWEETENED WITH A

VARIETY OF ADDITIONAL ENERGY

VINAMILK UHT MILK PLAIN (SWEETENED) Fino bag 200ml - 220ml

VINAMILK UHT MILK SWEETENED STAR Fino bag 200ml - 220ml

VINAMILK UHT CALCIUM, LOW FAT PLAIN

boxes/block)

380g and CARTON BOX 1.284g

DIELAC MAMA

CARTON BOX 400g, TIN CAN 400g and 900g

Vfresh FRUIT JUICE 100%

PAKAGING: CARTON BOX 1l,

12 CARTON BOX/ 1 BOX

Necta Vfresh FRUIT JUICE

CARTON BOX 1l ,12 CARTON BOXES/1 BOX

Vfresh MULTI JUICES FOR KIDS Juki

CARTON BOX 180 ml and 110

Vfresh MILK FRUIT JUICE

CARTON BOX 250 ml with STRAWS,3 CARTON BOXES/1 BLOCK, 24 CARTON BOX 1 BOX

Vfresh ALOE VERA DRINK

360 ml BOTTLE,6 BOTTLES/1 BLOCK, 24 BOTTLES/1 BOX

In addition, there are a number of products such as yogurt, soft drinks, ice cream, cheese, etc that are also packed in many different ways Packaging is provided by Tetra Pak company and Combi company In addition, Vinamilk has an automatic packaging system which is in every hour can wrap about 830-840 barrels

3.2 Finished goods transportation and warehousing activities

In warehouse management, Vinamilk uses Robots and "smart warehouses" The propelled robots (LGV) control the whole process from packaging materials to finished

self-products, providing optimal control of quality and ensuring cost effectiveness

Deputy Prime Minister Hoang Trung Hai highly appreciated Vinamilk to invest in the first smart warehouse of Vietnam's dairy industry and in the world (Photo: Nguyen A)

Machines are integrated into a system and operation synchronously, helping to improve efficiency and productivity far beyond the manual operation mode LGV robots can replace their batteries by themselves at automatic charging machines without human

Thus the robots today in the "super dairy factory" must be properly understood according to the definition in International Standard ISO 8373: "they are automatic

equipment, pre-programmed machine that uses many different purposes, furthermore, they are capable of moving in more than 3 axes, can be fixed or mobile according to their applications in the auto industry”

Automatic robot system at Vietnam Dairy Factory The whole factory applies automation and control technology integrated at a very modern world level, from the stage

of importing data to finished products (Photo: Ha Mai)