Group Assignment Report

Analyze the control process of Vinamilk
Fundamental of Management
Lecturer: Quang Trung Hieu

GROUP 3
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Student Information:
Pham Hoang Mai – HS160238
Nguyen Thi Thuy Linh – HS160695
Bui Vu Anh Đuc – HE153445
Vu Tien Đat - HE150308
Nguyen Tuan Nam – HS150431
Nguyen Tran Khanh Dung - HE141089

MGT101 | MKT1609 | July 10, 2021
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TABLE OF CONTENTS

I.

Company information ................................................................................................... 3

1.

Company profile..................................................................................................... 3

2.

From the values inside ........................................................................................... 4

3.

Development strategy............................................................................................. 4

4.

Organization chart ................................................................................................. 5

II.

Literature review ....................................................................................................... 6
1.

Definition ................................................................................................................ 6

2.

The purposes of control ......................................................................................... 6

3.

Types of control...................................................................................................... 6


4.

Steps in control process.......................................................................................... 6

III.

Critical analysis ......................................................................................................... 7

IV.

Analysis of Vinamilk's resource control process ...................................................... 8

1.

Physical resource .................................................................................................... 8
a. Physical resource .................................................................................................... 8
b. Inventory Management Process ............................................................................ 8
c. Quality Management Process .............................................................................. 10

2.

Human resource ................................................................................................... 12
a. Define mission and core values ............................................................................ 12
b. Corporate culture................................................................................................. 12
c. Policy on training human resources .................................................................... 13
d. Employee treatment policy .................................................................................. 13
e. Recruitment strategy of Vinamilk ....................................................................... 13

3.


Information resource ........................................................................................... 13

4.

Financial resource ................................................................................................ 15

V.

Difficulties & Recommendations .............................................................................. 17
1.

Difficulties ............................................................................................................ 17

2.

Recommendation.................................................................................................. 17

VI.
VII.

Conclusion ............................................................................................................... 18
Reference .............................................................................................................. 18

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I. Company information
1. Company profile


Type: Joint-stock company

Founded: August 20, 1976

Headquarters: 10 Tan Trao, District 7,

Traded as HOSE: VNM

Ho Chi Minh City, Vietnam
ISIN: VN000000VNM8

Industry: Food Processing

Brands: Vinamilk, Dielac, Susu,

Area served: Worldwide

Vfresh, Ong Tho, Probi
Products: fluid milk, powdered milk

Key people: Mai Kieu Lien - CEO

and sweetened condensed milk, along
with yogurt, frozen yogurt, ice cream,
cheese and infant nutrition flour
Revenue: 59.738 trillion VND (2020)

Services: General clinic, investing, real
estate


Net income: 11.236 trillion VND

Number of employees: up to 10.000

(2020)

(2020)

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2. From the values inside
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VISION: Become the leading symbol of trust in Vietnam about nutrition and

health products serving human life.
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MISSION: Vinamilk is committed to providing the community with top-class

nutrition and quality with its own respect, love and high responsibility for human
life and society.
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CORE VALUES:
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INTEGRITY:


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RESPECT: To have self-respect, to respect colleagues. To respect the

Integrity and transparency in actions and transactions.

Company and partners. To cooperate with respect.
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FAIRNESS: To be fair with employees, customers, suppliers and other

parties.
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COMPLIANCE: To comply with legal regulations, the Company’s Code of

Conduct, and the Company’s procedures and policies.
•

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ETHICS: To respect the established ethical standards and act accordingly.

BUSINESS PHILOSOPHY: Vinamilk desires to become one of the most

favourite brands in every region and territory. Therefore, they keep in their mind
and their heart that the quality and innovation are always the most important
companions. They act with customer-centered approach and commit to respond
to all their customer’s needs.


3. Development strategy
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Becoming one of the 30 largest dairy companies in the world.

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Leading in highly applicable innovations.

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Consolidating the leading position in the Vietnam’s dairy industry.

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Becoming the most valuable dairy company in the Southeast Asia.

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4. Organization chart
The organization Chart of Vinamilk is shown in a professional manner in which
departments are divided systematically and reasonably with specific hierarchy of
responsibility for each member and function in the company. This structure helps the
company to operate in the most effective way and fosters collaboration among
departments, thus making a strong company.

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II. Literature review
1. Definition
Control: the regulation of organizational activities in such a way as to facilitate

goal attainment.

2. The purposes of control
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Adapting to Environmental Change.
Limiting the Accumulation of Error.
Coping with Organizational Complexity.
Minimizing Costs.

3. Types of control
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Areas of Control:
• Physical resources
• Human resources
• Information resources
• Financial resources
Levels of Control:
• Operations control
• Financial control
• Structural control
• Strategic control


4. Steps in control process
Establish standards

Measure performance

Compare performance against standards

Determine need for corrective action
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III. Critical analysis
According to Anthony Stafford Beer “If cybernetics is the science of control,
management is the profession of control”. Control is a vital function of
management. Its importance becomes apparent when we see that it is essential in
all steps of management (Planning and Decision making, Organizing,
Leading). It helps to check for errors and take corrective action, minimizing
deviations from standards and keeping your project management on track.
Therefore, the success of the organization depends on effective control. To get
there, it has to be done by everyone in the organization, from the top to the
bottom.
It has never been easy to successfully create world-class dairy farming technology
with specific conditions in Vietnam. But Vinamilk with the right vision and
orientation; specific and clear goals; strict resource control process;
investment, creative application of advanced technology in production and
business activities associated with green and clean environmental protection has
created a sustainable development of a system of high-tech dairy farms. from
North to South.

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IV. Analysis of Vinamilk's resource control process
1. Physical resource
a. Physical resource
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Operating for more than 40 years, up to now, Vinamilk owns:
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2400 points-of-sale convenience stores.

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5.400 points-of-sale supermarkets.

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240.000 points-of-sale conventional channels.

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12 global G.A.P dairy farms.

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132.000 total herd of cows.

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200 items of pasteurized milk and dairy products.

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Total capacity of 504 thousand tons/year, reaching 70% efficiency.

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The production line reappeared and imported technology from
European countries such as Germany, Italy, and Switzerland to apply to
the production line.

b. Inventory Management Process
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Inventory is the term for the goods available for sale and raw materials
used to produce goods available for sale. Inventory represents one of the
most important assets of a business because the turnover of inventory
represents one of the primary sources of revenue generation and
subsequent earnings for the company's shareholders.

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Vinamilk classified inventories according to Standard No. 02 which is
one of 26 accounting standards issued and announced under Decision No.
149/2001/QD-BTC dated December 31, 2001 of the Minister of Finance.

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Vinamilk's inventory management:

• Goods are delivered to the receiving area of the warehouse.
• Goods are reviewed, sorted, and stored on shelves in special stock
areas. Goods may be assigned codes and tagged with barcodes for
easier tracking.
• Inventory levels are monitored regularly, with physical inventory
counts performed periodically. This ensures everyone has an accurate
understanding of available inventory and helps minimize the chance of
stockouts, deadstock, missed or duplicated orders, and risk exposure
due to theft and fraud. Vinamilk applied the EOQ (Economic order
quantity) model to calculate the optimal order quantity.
• Orders are placed by customers, either internal or external. For
example, a consumer may place a purchase order for the company’s
products, the sales department may submit a sales order, or a staff
member may submit a requisition for office supplies.
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The order approval is verified against the original purchase order,
sales slip, internal purchase requisition, etc.

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The required goods are pulled from stock areas and sent either to
production (manufacturing), directly to the retailer/customer/enduser (finished goods), or routed to the appropriate business
unit/department (internal requests).

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Records are updated and shared with all relevant stakeholders.

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Inventory levels are used to restock goods and materials as needed.

Besides, Vinamilk also combines with smart warehouses. Here, the Robots
automatically transfer finished goods to the warehouse. Pallet storage with
earthquake resistance; 8 warehouse systems and unloading machines Exyz
new and most advanced technology today. The system is faster, lighter, and
more energy efficient than any previous generation of similar machines.
The application of automatic technology and integration on automation
solutions, and Walmart warehouse management system have contributed to
turning the Vietnamese dairy factory into the most modern factory in the
world, marking Vietnam's mark on the world map in the dairy industry.

c. Quality Management Process
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Vinamilk mainly uses 2 tools to control product quality:
• HACCP (Hazard Analysis and Critical Control Point System).
• Management according to ISO 9001-2000.

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Quality management process includes:
• The quality control department sets out the quality requirements. The
quality of raw milk is determined through analytical tests of physicochemical criteria (content of dry matter, fat, protein), food safety
criteria (microbiology and contaminants such as heavy metals,
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mycotoxins, fungi, residues of veterinary drugs and plant protection
drugs,...) and organoleptic criteria (odor, color, ...).
• The import and export department will purchase goods according to the
given standards. Fresh milk from dairy farming households, after being
milked, is quickly delivered to transfer stations. At the transshipment
station, the factory's product quality inspector will conduct tests,
analyze precipitation, sense of taste, microbiological criteria, and lactic
fermentation. If the milk meets the standards, it will be purchased.
• Imported materials must be inspected and certified by the Department
of Food Safety and Hygiene.
• The Product Quality Control Department at the factory will check the
quality of all materials before putting them into production.
• During the production process, each stage is strictly controlled,
recorded and analyzed.
• After production is completed, the product will be thoroughly checked
before being sent to the warehouse.
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Vinamilk's milk quality control process rarely makes mistakes because the
production process is completely closed and monitored regularly by
computers. If there are errors, it mainly occurs during milking and
transportation because bacteria are most easily penetrated during these 2

stages. Vinamilk conducts assessments very often, attached to each
production process. This avoids major errors.

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The whole process of sampling, analyzing, and determining the amount of
milk to be paid to dairy farmers, if there is a difference between the standard
and the actual product quality, then there will be appropriate adjustments
and handling.

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2. Human resource
a. Define mission and core values
- Mission: Vinamilk wants to become the number 1 belief symbol in

nutrition and health products serving human life. Providing the best
nutrition, the best quality with their respect, love and high responsibility
for human life - society.
- Core values: Integrity – Respect – Fairness – Ethics – Compliance. These

are the 5 core values that any business should have.

b. Corporate culture
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Vinamilk always respects the opinions of employees. Therefore, its
employees are always respected, listened to and shared. Vinamilk does
not have a leadership style that imposes and forces employees to follow

a rut. Employees can freely give their own ideas and contributions to
make the company more perfect.

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Create a professional, friendly and open working environment. This
helps to break the gap between employees and leaders, employees with
employees, new people with old people for the purpose of promoting the
development of the company.

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Create mental comfort for employees to work with peace of mind so that
they can be more dedicated, enthusiastic and devoted to the company.

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Praise and criticize:
• Give rewards to employees who always try hard and work hard for the
company.
• Create discipline for employees who are not serious at work.

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c. Policy on training human resources
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Vinamilk recruits excellent graduates from universities throughout the
country and sends them to study abroad.


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Vinamilk supports 50% of tuition fees for staff training courses to
improve qualifications and professionalism.

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Short-term training program for employees in the company to improve
their qualifications and professionalism.

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Organize exchange and experience sharing sessions among officers and
employees to learn and absorb new knowledge.

d. Employee treatment policy
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Ensure income and benefits for employees.

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Timely reward individuals/groups with meritorious contributions to the
company.

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Criticize individuals/groups that adversely affect the company's
reputation.


e. Recruitment strategy of Vinamilk
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Employees are trained abroad.

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Rejuvenate human resources to create innovation motivation.

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Training both professionally and professionally.

3. Information resource
The information system at Vinamilk is designed based on the integration of
ERP management solutions which integrate many different information
technology solutions such as: Microsoft's solomon software, Oreal's CRM
customer management solution and sales software of FPT.
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This system ensures that information is circulated smoothly and timely between
Vinamilk and its distributors. For this system to work, Vinamilk has equipped each
distributor with a Palm 222, and many PDAs for sales staff. These PDAs run on
point of sale software developed by FPT. All information about promotional
products as well as customer policies is transferred by Vinamilk to Paml machines,
sales staff using PDAs can access information related to the day's goals as well as
other information. about products and promotions to convey to customers. At the
end of the day, all working results are transferred to Vinamilk's server. This

management method helps Vinamilk control the activities of distributors quickly
and effectively. With separate codes set for each distributor Vinamilk easily knows
which distributors are selling effectively and even the products they are selling
well.
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4. Financial resource
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Systematic financial management: Vinamilk always manages finances in a
systematic, detailed and clear manner. The company's financial statements
are regularly updated by the auditors monthly, quarterly and annually
according to the standards of the Vietnam Auditor. These standards require
them to comply with professional ethics regulations for the highest level of
accuracy. The reports are subsequently sent to the company's Executive
Board for review to ensure that they are error-free.
Profitable investment: Vinamilk also continuously invests the company's
idle money in profitable projects. Effective investments with high returns
will generate huge cash flows.
Balance between risk and return: Vinamilk's profit has always been
maintained at an attractive level. To maintain this attractive profitability,
Vinamilk has been very active in using financial leverage, which is easy to
see when profits have not increased but financial leverage has increased
rapidly from April 2019 to present.


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Pay attention to taxes: Vinamilk always considers and carefully calculates
tax-affected investments to be able to propose optimal solutions thereby
avoiding losses in business and production.
Always have a backup plan: In fact, no matter how good the options are,
unforeseen circumstances can still happen. Therefore, Vinamilk always
prepares itself with many options with contingency funds and insurance
services to be able to overcome unexpected crises such as Covid 19
pandemic, business losses, frauds, natural disasters, fire,...

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V.

Difficulties & Recommendations
1. Difficulties
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Due to some limitations in infrastructure and techniques at Vinamilk's
warehouse, a few goods in the process of storage were damaged.
Professional qualifications and ability to assess the quality of inventory
of some employees are still at an average level, which leads to errors.
Sometimes, the business has not yet determined the optimal order

quantity that leads to unnecessary costs.
During the distribution process, Vinamilk faced difficulties in managing
agents in remote areas.
The management of human resources also faces some difficulties because
of the hard-to-change habits of employees such as thinking, regional
culture, working style, lifestyle,...

2. Recommendation
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Investing in infrastructure to meet the needs of businesses and avoid
poor product quality.
Applying the highest standards of quality management systems such as
ISO, HACCP to bring the best product quality to consumers.
The administrator needs to clearly determine the volume of customers
ordering, as well as the remaining amount of goods in the warehouse to
meet the needs of buyers. If the remaining goods in stock do not meet the
customer's order quantity, the company needs to prepare backup
measures to solve this problem.
Technology application in distribution channel management.
Training and reinforcing knowledge for staff to avoid errors in the
product quality assessment process.
Employees should be listened to, understood: Managers should not only
speak and give orders, but must also listen. Listen to opinions, views and
contributions from your own employees before introducing a new policy,
regulation…

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VI. Conclusion
In conclusion, controlling is an important and indispensable part of
management. Proper control makes smoothness in the working of the
organization. Controlling helps in checking mistakes and tells us how new
challenges can be met or faced. Without, proper mechanism of control, the
management process will be incomplete. Control keeps the subordinate
under check and brings discipline among them. It reduces the chances of
mistakes that may be repeated in the future by providing preventive steps.

VII. Reference
1.

Editorial, R., n.d. VNM.HM - Vietnam Dairy Products JSC Profile | Reuters. [online]
Reuters.com. Available at: < [Accessed 5
July 2021].

2.

Samson, D., Donnet, T. and Daft, R., n.d. Fundamentals of management.
pp.382,383,384,385,386.

3.

Vinamilk.com.vn. 2020. [online] Available at:
< />[Accessed 5 July 2021].

4.


Kenton, W., 2021. Inventory. [online] Investopedia. Available at:
< [Accessed 8 July 2021].

5.

DelVecchio, L., 2020. What Is Inventory Management Process? Flow Explained |
PLANERGY Software. [online] PLANERGY Software. Available at:
< [Accessed 8 July
2021].

6.

MISA AMIS. 2018. Quản trị con người theo chiến lược nhân sự của Vinamilk - MISA AMIS.
[online] Available at: < [Accessed 8 July 2021].

7.

Diễn đàn Dân Kế Toán | Cộng Đồng Kế Toán - Thuế. 2020. Phân tích Báo cáo tài chính
CTCP Sữa Việt Nam (VNM) quý 3/2020. [online] Available at:
< [Accessed 9 July 2021].

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