VINAMILK INTRODUCTION

Vinamilk, which stands for Vietnam Dairy

Products Joint Stock Company, was established
in 1976 as the state-owned Southern Coffee-
Dairy. It has reached the title of the biggest dairy
company and has been listed as 15th 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 so on.
CURRENT STATE
Vinamilk has continuously been the biggest dairy company in Vietnam since its establishment in 1976 and its current
market shares account for 50% in the 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 it is expected to reach
3 billion USD of total revenue in 2017. In 2013, 2 milk farms of Vinamilk were given ISO 9001:2008 Certificate for
reaching the standard by the Bureau Veritas Organization from France. Currently, it has 5 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 quality.
MISSION
Vinamilk commits to provide the community with the best and highest quality source of nutrition which is derived from
respect, love and its responsibility to people's lives and society.
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 2nd in top 10 largest private businesses in Vietnam
15 place in the best 50 listed firms in Vietnam (According to Forbes Vietnam)
Most favorite Green Business and Product voted by consumers
• Year 2010, 2012, 2014:
National Brand (According to Ministry of Industry and Trade)
• Year 2017:
Continued to experience revenue growth, exceeding VND 51 trillion (US$2.2 billion)
• Year 2018:
CEO Mai Kieu Lien received the Lifetime Achievement Award by Forbes Vietnam for her contributions to the
company’s success.
• Year 2023:
Vinamilk has won the awards: "World Dairy Innovation Awards 2023" - the category of the best dairy substitute
product.
VINAMILK’S SUPPLY CHAIN STRUCTURE
Supplier
● Dairy Farms Tuyên Quang
● Dairy Farms Bình Định
● Dairy Farms Thanh Hoá
● Dairy Farms Lâm Đồng
● Dairy Farms Tây Ninh
Powerded Milk
● Fonterra (SEA) Pte Ltd
● Hoogwegt International BV
Tins
● Perstima Binh Duong
Carton Packaging and Packaging Machines
● Tetra Pak Indochina
Delivery of Material - Production Inventory

Production - Milk Factories (MF)

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.
Distributor and retailers

ROLES OF EACH MEMBERS IN VINAMILK’S SUPPLY CHAIN

Suppliers
For the sustainable development purpose and for the high quality products, it is a must to guarantee the standard of
all the supplying materials. That is the reason why suppliers play an important role in Vinamilk's success and also
contribute to the affordable products for the customers.
Fonterra is a global, cooperatively-owned company, also one of the best companies in the dairy products field. The
company holds approximately 30% of the world's dairy exports and it provides high class powdered milk to many
organizations including Vinamilk.
Hoogwegt International was established in 1965 in the Netherlands, with more than 40 years of experience Hoogwegt
Group consisted of the most significant dairy companies all over the world. Having a partner as Hoogwegt
International is considered to assure the precise information about dairy products business and catching up with the
new trends of customers as well. Furthermore, it has such a 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 which is also devoted to its success story.
Tetra Pak is one of the largest international companies with headquarters in Sweden which supplies processing
solutions and products packaging for more than 170 countries. In 2013 it provided Vinamilk with the integration and
automation technology in the newly built factory that helps enhance the efficiency of production within the factory.
One more factor which is taken into account of Vinamilk competitive advantages is the fresh milk collected from the
farms. After being bought from the farmers, the fresh milk will be immediately moved to the milk hubs within 1 hour in
a cold storage system and then they will get the quality check with the set of standards 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 to be tested with 75 degree alcohol to inspect the precipitation. After that, the qualified fresh milk will be
transported to the factories and wait for the production and in 2013, Vinamilk bought 156,562 tons of milk from the
farms in total.
Perstima Binh Duong has continuously been a long-term partner of Vinamilk since establishment in 1976 with the
provision of high quality Tins which took part in the
That is the reason why Vinamilk promises to bring the highest quality dairy products to the customers since they are
strictly inspecting every issue from the beginning.
DELIVERY OF MATERIALS
For the purpose of safely transporting these materials under strict rules and to assure the quality of the materials,
Vinamilk has owned 2 logistics enterprises in the North and South of Vietnam. Their functions are to store the
materials served for the production lines and ship the products to the distributors as well as the consumers through
the truck shipping system. This also to make sure that all the products will be easily shipped since these logistics
enterprises are located in two directions of Vietnam which is pretty flexible.
● Ho Chi Minh Logistics Enterprise: 32 Dang Van Bi, Truong Tho Ward, Thu Duc District, Ho Chi Minh City.
● Ha Noi Logistics Enterprise: Km 10 Route 5, Duong Xa Commune, Gia Lam District, Ha Noi Capital.
PRODUCTION
From October 2013, Vinamilk has adapted new production technology which is an automatic and closed production
line from raw materials input to products output.

● After going through quality check, measurement equipment and clarification; fresh milk will be poured into
the cold tank system (150m3/tank)

● From the cold tanks, the raw fresh milk will go through many stages such 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.
Thanks to the combination of these factors: advanced processing technology, UHT pasteurization and aseptic filling
technology, the products can keep the good flavor within 6 months without any preservatives.

● Automatic LGV Robot will move finished-goods pallets to the smart storage. They will automatically move
the packaging roll and packaging materials to other machines, they also recharge the battery without human
control.

Vinamilk 's factories list: Vinamilk currently owns 12 factories located throughout the country
• Trường Thọ Milk Factory : 32 Đặng Văn Bi St., Trường Thọ Ward, Thủ Đức District, HCMC
Specializes in manufacturing: sweetened condensed milk, UHT milk, Soya milk, Yogurt, Fruit Juice, Cheese
• Thống Nhất Milk Factory : 12 Đặng Văn Bi St., Trường Thọ Ward, Thủ Đức District, HCMC
Specializes in manufacturing: sweetened condensed milk, UHT milk, ice cream, yogurt and drinking yogurt
• Dielac Milk Factory : Hà Nội Highway, Biên Hòa I Industrial zone, Bình An ward, Biên Hòa City, Đồng Nai Province
Specializes in manufacturing: powdered milk for children and adult, nutrition powder for children
• Vietnam Powdered milk Factory : 9 Tự Do Avenue, VSIP1 Industrial Zone, Thuận An commune, Bình Dương
Province
Specializes in manufacturing : powdered milk for children and adult
• Bình Định Milk Factory : 87 Hoàng Văn Thụ St., Qui Nhơn City, Bình Định Province
Specializes in manufacturing : UHT milk, ice cream, yogurt and drinking yogurt
• Nghệ An Milk Factory : Sào Nam St., Nghi Thu Ward, Cửa Lò commune, Nghệ An province
Specializes in manufacturing: condensed milk, milk, yogurt
• Sài Gòn Milk Factory : 1-18 Block 1, G1 Area, Tân Thới Hiệp Industrial Zone, lane 80, Hiệp Thành ward, District
12, HCMC
Specializes in manufacturing: milk, yogurt and drinking yogurt
• Cần Thơ Milk Factory : Block 46, Trà Nóc 1 Industrial Zone, Trà Nóc Ward, Bình Thủy District, Cần Thơ City
Specializes in manufacturing : milk, yogurt, ice cream cake
• Tien Son Milk Factory : Tien Son Industrial Zone, Hoan Son commune, Tien Du District, Bac Ninh province
Specializes in manufacturing: condensed milk, yogurt, milk and fruit juice, ice cream
• Đà Nẵng Milk Factory : Block Q, Street 7th, Hòa Khánh Industrial Zone, Hòa Khánh Bắc Ward, Liên Chiểu District,
Đà Nẵng City
Specializes in manufacturing : milk, yogurt
• Vietnam Milk Factory: Block A-4-CM,A-5-CN, A-6-CN, A-7-CN, Mỹ Phước 2 Industrial Zone, Bến Cát District, Bình
Dương province
Specializes in manufacturing: condensed milk, yogurt, milk and fruit juice, ice cream and soya milk
• Việt Nam Beverage Factory : Block A, NA7 St., Mỹ Phước 2 Industrial Zone, Mỹ Phước Town, Bến Cát District,
Bình Dương province
Specializes in manufacturing : fruit juice, tea...
• Miraka Milk Factory : locates in New Zealand
Specializes in manufacturing: UHT milk, powdered milk
All Vinamilk's laboratories in these factories 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 continuously keep track of all the
processes within the factories to make sure the production occurs under high standard and Tetra Pak provides the
information that enhances the efficiency of the production.
STORE OF FINISHED GOODS
The special thing about this closed production line is that it has the first and biggest smart storage in Vietnam with an
area of 6000 m? and 20 entry ports; the storage is 105 meter long, 35 meter high including 17 bracket floors and
27168 storage spots. With this, the import and export of materials and goods will be automatically operated with 15
automated rail guided vehicles which will transfer the finished products pallet to the storage and 8 stacker crane
robots will arrange these pallets on the shelf brackets.

With the storage management system Wamas integrated with management system ERP and Tetra Pak Master
Automation solution, which bring the smooth and seamless production within the factories with other activities such
as production planning, importing materials and exporting finished-goods as well.
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 assures the company to reach all the customers from three parts of
Vietnam which are the north, center and south and also create opportunities to present its new products easily. Until
the end of 2013, Vinamilk had more than 224,000 retailers nationwide and 60 product showrooms.
For domestic market:
Vinamilk assigns the products to their distributors and from the distributors, the goods will go to the retailers and final
customers are the consumers who will directly use its products.
For the domestic retailers system, it is divided into 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 companies 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 open 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 of this group, the more popular its products will be.
Normally for each retailer, it depends on 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: modern and traditional channels:

• Modern channel: Vinamilk directly sells 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 exclusive widespread contributors. The locations
for these contributors are divided clearly to serve the nearby retailers. On 31' December 2013, Vinamilk owned more
than 224,000 retailers, which was 24,000 more than at 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 foreign markets:
The exports 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 Vinamilk's new acquisition on 315
December 2013 in State California, United States.
DISTRIBUTION MANAGEMENT SYSTEM:
To efficiently manage these distribution channels, Vinamilk has adopted and successfully applied these advanced IT
techniques into their operation such as Enterprise Resource Planning (ERP), Oracle E Business Suite system and
Customer Relationship Management (CRM).
● Oracle E Business Suite system has been officially applied into the operation system of Vinamilk since
January 2007 and the company was recognized as the 15 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 close relationship as long as the
convenience for customers to contact the sellers and the company anytime, anyplace and by any means of
communication. This is a really effective system to help enhance the efficiency of customer policy as well as
the distribution program for each distributor and retailer 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 allows the distribution channels throughout Vietnam to access the
headquarters in both offline and online modes. With the information center, Vinamilk would be able to make
critical decisions on time and also boost up the planning processes effectively. By updating customers'
information of each retailer, the company can satisfy the consumers in such a higher stage; furthermore, this
also supports the workers in the retailers to be more flexible, to keep track of the trends of the market and
also to improve their personal skills. Besides, Vinamilk also keeps an eye on the price policies and discounts
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 information technology systems into the whole processes of the company, Vinamilk has
successfully managed all distribution channels, improved employees' skills and satisfied consumers' needs which
increase day by day. Therefore, at the end of 2013, the total revenue Vinamilk had earned was 31,586 billion VND
which was a little bit lower than in the plan; however, this total revenue has increased 17% compared 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 will show the company what they are into, what
they are concerned about in the products as well as expected demand that Vinamilk may need to adjust the flexibility
and improve its supply chain. Besides, Vinamilk wants the consumers to 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 areas and also show the care for the environment which is a really big problem recently for every
company. By doing that, Vinamilk not only gains the benefit from the customers but also achieves the reputation and
support from them.
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 has the best dairy manufacturers in Vietnam with advanced technology that reaches international level.
High quality products and a 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 has a skillful 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, CRM, ERM and so on
from production, quality management to distribution channels.
• Efficient and highly experienced 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 for Vinamilk.
Drawback
Besides the advantages, there are still disadvantages remained in Vinamilk's supply chain such as:
• 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 productivity compared 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 fulfill 30% of production demand;
therefore, the stability of suppliers and raw materials cost are based on the world's supply-demand relationship.
CONCLUSION
According to all information above, we can see that it is not a coincidence that Vinamilk has become the 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 company is trying every single day to improve 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 so 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 a long-term strategic plan and stick with it and also enhance the management department within the
company.