NGUYEN NGOC TRAM ANH

BEBEIU19041

COMMODITY CHAIN OF VINAMILK

I. Definition Commodity chain
A commodity chain is a process used by firms to gather resources, transform them into goods
or commodities, and finally, distribute them to consumers. It is a series of links connecting
the many places of production and distribution and resulting in a commodity that is then
exchanged on the world market. (In other words, it is the connected path from which a good
travels from producers to consumers. Commodity chains can be unique depending on the
product types or the types of markets. Different stages of a commodity chain can also involve
different economic sectors or be handled by the same business)
II. Commodity chain of VINAMILK
VINAMILK has grown and become the leading enterprise of the dairy processing industry,
currently accounting for about 40% of the dairy market in Vietnam. In addition to strong
domestic distribution with a network of dense distributor, by the end of 2011, Vinamik 232 has
distributors in all provinces of VN and 178,000 retailers, Vinamilk products are also exported
to oversea countries like US, France, Canada, Poland, Germany, Middle East, Southeast Asia…
Diagram of commodity chain of VINAMILK

Note: làm giùm bé cái biểu đồ, sửa giùm t về tiếng anh hết nha , với lại chỉ giữ lại mũi tên đỏ
Milk product supply chain model of Vinamilk dairy company
Farmer households, farms (HCM, Lam Dong, Long An, Tuyen Quang, Lam Dong, Thanh Hoa,
Nghe An...)
Fresh milk purchasing center, cooling 40C
Importing milk materials
Factory (Dong Nai, Ho Chi Minh City, Hanoi, Binh Dinh, Can Tho)
Distribution (Phu Thai)
Agents, stores: 220 distributors, over 140,000 points of sale
Consumers
1. Suppliers
Raw materials purchased from domestic cow farmers and imported from foreign
companies. This is the first member of the supply chain.
Farming households raising cows provide input milk materials for production through milk
collection stations. Fresh milk purchasing centers have the role of buy raw milk materials from
farmer. Then these centers will weigh and measure milk, check quality, preserve and transport
it to the factory. At the same time, the center will pay money to farmers raising cows.
For imported dairy materials, it can be imported through intermediaries or directly imported
and then transported to the factory. Ok, I have an example for the supplier of imported dairy
materials for Vinamilk, Fonterra is the greatest multinational group in the field of milk and dairy
products exports in the world , this group holds one third of the total. trading volume
worldwide.
Then will be delivery materials to factories
The input supply chain plays a very important role for a quality product to meet the needs of
consumers, so building long-term and sustainable development goals for strategic suppliers
Advantages of input supply: Cow's milk is purchased from Vietnamese farmers, so the cost is
cheap
Limitations of the input supply chain: Milk powder, milk fat… (used in the production of
whole milk, pasteurized milk, yogurt… and other products): imported from leading
production sources. and reputable in the world such as the US, Australia, New Zealand...
that's why the price is very high.
2. Vinamilk's production stage
Note: làm giùm t cái biểu đồ như ở dưới, t có search sẵn mấy chữ đó sang tiếng anh rồi.
 Vinamilk milk production process
1. Raw milk
2. Standardized
3. Degas
4. Puree
5. Stabilizers
6. Mixing
7. Assimilation
8. Pasteurization
9. Pour product
10. Store at room temperature
11. Spice

When milk is transported to processing plants and processing plants, the milk will be
tested many times before it is put into the production line. after performing the
production stages. Then will package the finished products
 Highlights of Vinamilk's production process: closed production chain. The heat
treatment process is strictly monitored. Heat treatment modes are selected and
considered to ensure food quality and safety while preserving the nutritional value of
milk at the highest level. Priority to choose high heat treatment modes in extremely
short time, these are advanced technologies in the world.

Milk Factories

3. Output distribution stage of Vinamilk

- VINAMILK goods through Phu Thai group to agents, stores and then to consumers,
which is the final factor in the output-consumer distribution chain.
- Agents, stores and supermarkets have the role of receiving milk from distributors
and supplying fresh milk to consumers.
-Consumers are those who directly consume milk. Consumers can buy milk from
agents, supermarkets, sale or retail stores and pay for milk at the place of purchase.
the company has 2 distribution channels:
(1) traditional channels (232 independent distributors and more than 178,000 retail
points), distributing more than 80% of the company's output. To support its
distribution network, Vinamilk has opened 14 product showrooms in big cities like
Hanoi. Da Nang, Ho Chi Minh City and Can Tho.
(2) modern channels (such as supermarkets, Metro...). Vinamilk's advantage is through
a system of invested dairy factories in many localities throughout the country. With
more than 1,400 first-level agents as well as a nationwide distribution network with
more than 5000 agents and 178,000 retail outlets selling Vinamilk's products as well as
in other direct distribution channels such as schools, Hospital, supermarket…

Advantages and Drawback of Vinamilk’s Commodity Chain

Advantages
 Vinamilk got the best dairy manufacturers in Vietnam with advanced technology
that reaches international level. High quality products and 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 got 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 technology systems into operation management such as ERP, CRM, ERM
and so on from production, quality management to distribution channels.
 Efficient and highly experience 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.
Drawbacks
 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 comparing 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
fulfil 30% of production demand; therefore, the stability of suppliers and raw
materials cost are based on the world’s supply-demand relationship.

www.vinamilk.com.vn 
http://www.vinamilk.com.vn/vi/bao-cao-thuong-nien
http://www.fonterra.com/global/en
http://www.vinafco.com.vn/index.php/Tin-tuc-nganh/