HOẠT ĐỘNG QUẢN LÝ KHO HÀNG TẠI KHO THÔNG MINH VINAMILK BÌNH

DƯƠNG

Cù Thảo Ly, Nguyễn Diệu My

Sinh viên K60 CLC Kinh tế - Viện Kinh tế và Kinh doanh quốc tế

Trường Đại học Ngoại thương, Hà Nội, Việt Nam

Nguyễn An Khang, Nguyễn Cao Kỳ, Chu Thị Minh Phương, Nguyễn Thùy Trang

Sinh viên K59 Logistics và Quản lý chuỗi cung ứng

Nguyễn Thị Yến

Giảng viên bộ môn Quản lý kho hàng và phân phối

Trường Đại học Ngoại thương, Hà Nội, Việt Nam

Tóm tắt

Bài nghiên cứu phân tích công tác quản lý kho hàng của Vinamilk dựa trên hoạt động nhà
kho thông minh tại Bình Dương của công ty, bao gồm việc áp dụng công nghệ vào quản lý
nhà kho và quá trình nhập xuất hàng. Nhóm nghiên cứu thu thập dữ liệu thứ cấp và vận dụng
kiến thức của môn học “Quản lý kho hàng và Phân phối” để thực hiện bài nghiên cứu. Để
điều hành nhà kho thông minh được xem là hàng đầu tại Việt Nam, Vinamilk sử dụng giải
pháp Hoạch định Tài nguyên Doanh nghiệp ERP, kết hợp với hệ thống kho thông minh
WAMAS, hệ thống dây chuyền hiện đại của Tetra Pak và mô hình quản lý hàng tồn kho
EOQ. Quá trình nhập, xuất của công ty dựa trên dây chuyền khép kín, hiện đại và tiên tiến,
cùng với phương pháp sử dụng loại kệ chứa hàng AS-RS để tối ưu hoá hoạt động kho và sự
trợ giúp của các robot tự động, sản phẩm của Vinamilk luôn được đảm bảo chất lượng tuyệt
đối từ nguyên liệu đầu vào đến đầu ra sản phẩm. Ngoài những ưu điểm về gia tăng năng suất,
giảm chi phí, tối ưu hoá hoạt động kho hàng thì kho thông minh của Vinamilk vẫn còn những
hạn chế về yêu cầu kỹ thuật, trình độ nhân lực. Vì vậy, Vinamilk được khuyến khích đẩy
mạnh tự động hoá nhưng vẫn đảm bảo được sự tương thích giữa các công nghệ và hệ thống
được áp dụng. Đồng thời, công ty cũng có thể áp dụng mô hình lý thuyết nhưng vẫn dựa trên
cơ sở của doanh nghiệp và điều kiện thực tế của thị trường.

Từ khóa: Vinamilk, quản lý kho bãi, nhà kho thông minh Bình Dương, hoạt động kho bãi
 WAREHOUSE MANAGEMENT ACTIVITIES OF VINAMILK AT BINH DUONG
SMART WAREHOUSE

Abstract

This present study investigates the inventory management of Vinamilk based on the
company’s inventory activities in a smart warehouse located in Binh Duong, including
technological applications as well as the receiving and delivering process. The research
group collected secondary data and put the knowledge and the skills learned from the subject
“Warehouse management and Distribution” into use to conduct this study. To operate a
known-to-be leading warehouse in Viet Nam, Vinamilk applies the Enterprise Resource
Planning ERP solution, WAMAS system, modern production line designed by Tetra Pak and
the inventory management model EOQ. The process of receiving and delivering is closed,
modern and advanced, with the use of Automated Storage and Retrieval System AS-RS to
optimize inventory activities and the support from automated robots, the quality of
Vinamilk’s products are always guaranteed from input materials to output products. Apart
from benefits in increasing productivity, reducing cost and optimizing inventory activities,
Vinamilk’s smart warehouse still has some drawbacks regarding limitations in technical
requirements and human resources. Therefore, Vinamilk is advised to enhance automation
while ensuring the compatibility of different technologies and systems at the same time. In
addition, it is also recommended to apply theoretical models in accordance with business
situations and the market conditions.

Keywords: Vinamilk, warehouse management, Binh Duong Smart warehouse, warehouse

activities.

Introduction

In the global economy nowadays, Vietnam has been making significant efforts in
completing the task of international exchange and integration, which leads to increasing
commodity trade activities in both size and market structure. Manufacturing enterprises are
gaining an increasing amount of opportunities to participate in the international market,
however, along with the opportunities, the competitiveness is becoming fierce. Therefore,
enterprises are starting to pay more attention to improving their competitiveness by
perfecting their logistics activities such as purchasing activities, supply warehouse
management, input transportation factors, and secure storage goods management,...
With the trend of globalization, Vietnamese businesses must be properly aware of
themselves about business, about the market, about competitors, and from there have
appropriate strategies to win in the market. The design and realization of the control and
management system is vital. For that reason, our research group has chosen to analyze and
evaluate the warehouse management system of Vinamilk - one of the biggest manufacturing
and trading enterprises in Vietnam.

1. Overview of Vinamilk - Vietnam Dairy Products Joint Stock Company

1.1. Overview of Vinamilk

1.1.1 General introduction

- Name: Vietnam Dairy Products Joint Stock Company (Vinamilk)

- Headquarter: No. 10, Tan Trao Street, Tan Phu Ward, District 7, Ho Chi Minh City,
Vietnam.
- Hotline: 028 54 155 555
- Fax number: 028 54 161 226
- Website: Vinamilk.com.vn

Vietnam Dairy Products Joint Stock Company (Vinamilk) was established on

20/08/1976 and first known as Southern Milk and Coffee Company - under the Southern
General Department of Food Industry. Vinamilk manufactures and trades milk and dairy
products as well as related machinery and equipment in Vietnam.

Since its foundation, Vinamilk has always aimed to “Become Vietnam's leading belief
symbol in nutrition and health products serving human life”. Also, the Company carries with
them the mission of bringing the community top quality and nutrition with their own respect,
love and high responsibility for human life and society. With the above vision, Vinamilk
commits to:

- Human nutrition: Vinamilk commits that each Vinamilk product is the result of a
closed cycle that fully meets strict requirements.
- Environment and energy: Vinamilk always strives to find solutions to minimize
adverse impacts on the environment and find ways to use resources and energy
efficiently.
- Local economic development: Vinamilk all aims to link the company's development
with the general development of the local and national economy, such as the
development of dairy farming, local employment.
- Labour: Vinamilk commits to ensuring the health and safety of employees, also
establishes annual safety training and instruction program for workers
- Community support and development: Vinamilk established charity funds to assist
disadvantaged children as well as people in difficult or natural disaster areas.

1.1.2. Personnel apparatus

The total number of personnel of the Company is over 6000, including teams and
departments as follows:
 Figure 1. Vinamilk organizational structure
Source. Vinamilk.com.vn

Administrative Council:

- Mr. Nguyen Hanh Phuc (Chairman of the Board, Human Resources Committee)
- Mrs. Mai Kieu Lien (General Director, Strategy Committee)
- Mrs. Tieu Yen Trinh (Compensation Committee)
- Mr. Do Le Hung (Audit Committee).
Executive Board:

- Director of Material area development

- Director of Human Resources and External Relations
- Director of Research and Development
- Director of Finance
- Director of Marketing
- Director of Executive Producer

1.1.3. Field of business

The main business activities of the company include:

- Processing and distributing dairy and related products

- Producing fruit and vegetable
- Producing beverage
- Manufacturing and trading machinery and equipment

1.1.4. Business situation

Vinamilk has grown to be one of Vietnam's largest dairy brands, actively contributing
to the country's overall development and the dairy industry in particular, propelling the
Vietnamese dairy brand to a prominent position on the global dairy industry map.

Figure 2. Total revenue of some dairy enterprises in the period 2018-2021 in Vietnam
Unit: Billion VND
Source. Dantri, 2022

In 2021, despite difficulties due to the COVID-19 epidemic, the dairy market's
revenue still grew and reached VND 119,300 billion. According to the graph above, it can be
seen that Vinamilk accounts for nearly 55% of the total milk market share in Vietnam, and is
far ahead of other companies in the industry such as Moc Chau Milk, Hanoi Milk. Despite
being affected by the epidemic, total revenue still increased year by year, specifically
reaching VND 60,919 billion in 2021, up 2% compared to the same period in 2020. Total
revenue is largely composed of domestic sales, accounting for 84% of the total revenue
structure.

Figure 3. Vinamilk’s revenue structure in 2021

Source: Baodautu, 2022

Vinamilk has affirmed its brand value through a series of major awards after 45 years
of establishment and development, including:

- Top 10 high quality Vietnamese goods

- Top 50 most valuable brands in Vietnam according to Forbes
- National brand
- 6 Medals of Labors
- Global CSR Award (Laodong, 2021)

1.2. Vinamilk's smart warehouse system

1.2.1. Overview of Vinamilk smart warehouse’s system
Vinamilk currently operates 13 dairy factories across the country, including the smart
warehouse in Binh Duong. Located in the mega factory premises with a total area of 20
hectares and a capacity of 400 million liters of milk per year, Vinamilk Smart warehouse is
built and invested with massive facilities. The warehouse system covers an area of 6000m2,
has a length of 105m, a height of 35m, 17 rack floors, 20 entry and exit ports, and 27168
pallet storage units (Khue D., 2020).
 Vinamilk Smart warehouse in Binh Duong is also well-known for its warehouse
management automation. All lines and equipment are supplied by European manufacturers,
and the flow of goods in the warehouse is fully automated by robots and 15 self-propelled
vehicles on a 370m-long rail system. Other notable equipment used here should be
mentioned as: AS-RS shelves, RGV robots, Tetra Plant Master.

1.2.2. Regulations

- Safety first: Vinamilk places a high priority on safety in its warehouses. All personnel
are required to comply with safety guidelines and procedures to minimize the risk of
accidents or injuries.
- Inventory management: Vinamilk has established strict inventory management rules
to ensure that products are properly stored, tracked, and accounted for. Inventory
levels are regularly checked to ensure that there is always enough stock to meet
customer demand.
- Product handling: All products are handled with care to minimize the risk of damage
or spoilage. Products are properly packaged, labeled, and stored to ensure that they
are easily accessible for distribution.
- Hygiene and sanitation: Vinamilk places a high priority on hygiene and sanitation in
its warehouses to ensure that products are stored in a clean and safe environment.
Regular cleaning and sanitation procedures are implemented to maintain the
cleanliness of the warehouse.
- Compliance with regulations: Vinamilk ensures that all warehouse activities comply
with local regulations and laws governing the storage and transportation of dairy
products.
- Continuous improvement: Vinamilk regularly reviews and evaluates its warehouse
system to identify areas for improvement and implement changes to improve
efficiency and reduce costs.

1.2.3. Personnel of the warehouse

Vinamilk’s warehouse system consists of a team of skilled personnel who collaborate

to ensure the warehouses' efficient operation and the timely delivery of products to
customers. This smart warehouse system includes the following key personnel:

- Warehouse Manager: The Warehouse Manager is responsible for overseeing the

day-to-day operations of the warehouse, including inventory management, personnel
management, and ensuring that all warehouse activities comply with health and safety
regulations.
- Inventory Controller: The Inventory Controller is responsible for managing the
warehouse's inventory, including ordering new products, tracking inventory levels,
and conducting regular stock checks.
 - Warehouse Supervisor: The Warehouse Supervisor oversees the warehouse staff,
ensuring that they are properly trained and equipped to perform their duties. They
also ensure that all warehouse activities are performed efficiently and safely.
- Forklift Operators: Since Vinamilk applies automation system for the safe and
efficient movement of goods within the warehouse, forklift operators now are
responsible for loading goods from the dispatch area to trucks.
- Delivery Drivers: Delivery drivers are responsible for transporting products from the
warehouse to customers or retail locations. They ensure that products are delivered on
time and in good condition.

2. Warehouse management activities of Vinamilk

2.1. Technological application in Vinamilk Smart Warehouse

2.1.1. The ERP system
Enterprise Resource Planning (ERP) is a business management software that helps
organizations manage their core business processes, including finance, accounting, supply
chain, manufacturing operations,... The term “ERP” was first used in the 1990s by the
Gartner Group, but enterprise resource planning systems actually have their roots deep in the
manufacturing industry, and can trace their history back to the 1960s.
Advantages:
- Enhanced operational effectiveness: By offering a central database, the ERP system
helps Vinamilk to eliminate unnecessary procedures, streamlining workflows, and
minimizing errors.
- Improved visibility: The system provides Vinamilk with access to real-time data on
every area of the business’ operations, empowering them to make quick decisions.
- Improved collaboration: The ERP system makes it possible for staff members from
various departments to access and share information.
- Better financial management: ERP gives accurate financial data and helps companies
to perform more efficiently in cash flow and risk management.
Disadvantages:
- Building the ERP system is a pricy process. The installation of ERP, platform
maintenance and sometimes hiring additional technical staff would cost a
considerable amount of money.
 - The system can be complicated to use. With so much functionality and capabilities
that ERP systems provide comes their substantial complexity, which some users find
hard to deal with.
ERP application in Vinamilk’s warehouse:
- Optimizing production processes: The system is used in production planning and
managing as well as activities such as scheduling and tracking. The use of ERP could
help increase product quality and minimize waste.
- Inventory management: Vinamilk uses the ERP system to keep track of its inventory
levels and the goods flow within the supply chain. By doing this, the business can
reduce inventory cost and make sure that it has enough inventory on hand to satisfy
demand on the market.
Evaluation on Vinamilk's ERP implementation
Benefits:
- Regarding the organizational structure of the company, in addition to
improving the staff’s skills and knowledge, the ERP system has successfully
met the needs of users. Management activities become easier, systematic and
more efficient in making timely decisions.
- Vinamilk is especially successful in the distribution business. The distributors
can connect directly with the system via the internet or connect offline using
Solomon software by Microsoft.
Drawbacks:
- Inadequate human resources: Not only Vinamilk but many businesses when
applying ERP have difficulties regarding this aspect, especially with
inexperienced staff in ERP expertise. Therefore, Vinamilk may send
employees to professional training programs which takes time beside a
required large investment.
- ERP is still an expensive system for businesses, even for a leading and large
enterprise in Vietnam like Vinamilk.
2.1.2. The WAMAS system
"WAMAS" is a warehouse management system developed by SSI Schaefer - a
German company. The system is software-based and used in managing warehouse operation,
including logistics, order fulfillment, and inventory management. Vinamilk installed the
WAMAS system to boost business productivity and optimize inventory management.
A variety of features and functionalities offered by the WAMAS system are intended
to simplify warehouse management procedures. For instance, the system is capable of
automating a variety of warehousing processes, including packing, order picking, and
inventory checks. The WAMAS system is also customizable, which makes it easy and
flexible for businesses to make adjustments based on business requirements and market
conditions. Another remarkable point is its ability to integrate with other systems and
technologies, such as robotics and automated storage and retrieval systems (ASRS).
WAMAS application in Vinamilk’s warehouse:
- Warehouse Design: Prior to the implementation of the WAMAS system, Vinamilk
and SSI Schaefer worked together for the design of warehouse layout and workflows.
This includes planning conveyor belts and other material handling systems, and
figuring out where automation could be employed to boost productivity.
- Inventory management: Vinamilk can optimize its stock levels and minimize waste
through real-time visibility provided by the WAMAS system. The system closely
monitors specific products from receipt to shipment across the warehouse. What’s
more, Vinamilk may use WAMAS in monitoring expiration dates along with other
metrics to ensure fresh and high-quality milk.
- Order Fulfillment: WAMAS helps Vinamilk simplify and enhance the productivity of
its order fulfillment processes, from receiving orders to packing and shipping
products. Several processes, including order picking, packing, and labeling, can be
automated using the system. Also, WAMAS can be used to arrange products in the
warehouse optimally, making sure that popular items are easily found and that orders
can be filled precisely and promptly.
- Reporting and analytics: Vinamilk can measure key performance indicators (KPIs)
and spot opportunities for development thanks to the variety of reporting and
analytics tools offered by the WAMAS system. In addition to generating reports on
inventory levels and order fulfillment rates, the system can also offer real-time
dashboards indicating current performance. As a result, it is easier for the company to
 identify trends, track the effectiveness of its operations, and make informed decisions
about its business.
Overall, the implementation of the WAMAS system has helped Vinamilk to improve
the efficiency of its warehouse operations and optimize its inventory management. By
leveraging the latest advances in warehouse management technology, Vinamilk has been able
to stay ahead of the competition and meet the needs of its customers in a rapidly changing
market.
2.1.3. The EOQ model
The economic order quantity (EOQ) refers to the optimum quantity of an item that
should be ordered at a point in time. This helps companies to meet demand while minimizing
inventory costs such as holding costs, shortage costs, and order costs. This model has been
refined over time, and was initially developed by Ford W. Harris in the 20th century.
EOQ is a method used to determine the most suitable amount of materials or goods to
buy. This is a highly efficient yet simple method. The formula of EOQ is given as following:
EOQ = √((2DS)/H)
D = Annual demand (units)
S = Cost per order ($)
C = Cost per unit ($)
I = Holding cost ($)
H = Holding cost ($) = I * C
When using the EOQ, we follow the following assumptions:
- Demand, ordering, and holding costs all remain constant throughout the year
- Inventory will be restocked in one go each time
- Cost per unit remains unchanged regardless of the size of the order. This assumption
means that the purchasing cost has no effect on the EOQ model since.
- Stockout is not taken into account
Total cost = Ordering cost + Holding cost
= (D/EOQ)*S + (EOQ/2)*C.
The reorder point is an indicator that reflects the minimum amount of stock left in
inventory to initiate a new order request.
Reorder point = Average daily usage * Lead time
Advantages:
- The main advantage of the EOQ model is the customized recommendations provided
regarding the most economical number of units per order. The model may suggest
buying a larger quantity in fewer orders to take advantage of discount bulk buying
and minimizing order costs.
- The EOQ model is simple, user-friendly and easy to apply widely in many
companies. It helps businesses efficiently control costs such as ordering cost or
holding cost.
Disadvantages:
- The EOQ model assumes constant demand for a business product, immediate
availability of items that need to be restocked. As a result, it does not account for
seasonal or economic fluctuations so this inventory management model requires
continuous monitoring of inventory levels. Therefore, it is advised that the current
situation of the business should be taken into consideration as well.
EOQ application in inventory management activities of Vinamilk:
The best E-commerce traders and retail operators are motivated by a prudent reason
to avoid out-of-stock. Using the inventory management model - such as the EOQ model -
would assist companies in handling the ideal number of requests to reduce inventory costs.
The model is also suitable for companies with a stable demand for inventory, for example,
companies with repetitive production processes over a long period of time. The large-scale
business model of Vinamilk involves standard producing cycles with certified and modern
fresh milk production lines.
2.1.4. Tetra Plan Master system
The operating system based on the integration, automation and digitalization solution
Tetra Plant Master, allows to connect and integrate all equipment so that the plant can control
all the production process. All equipment and machinery systems, especially LGV robots, are
operated automatically and controlled by a central computer system. As a result, this single
IT system can help the factory control all activities taking place in the factory, monitor and
control the quality continuously while minimizing consumption of water, energy, packaging
material and the milk itself. Tetra system Plant Master also provides all the necessary data to
help the plant to constantly improve production operations and maintenance.
 The idea behind Tetra Plant Master is that one or a few operators are supposed to run
and control the entire process from when the raw milk arrives at the dairy to the point when
the finished product leaves the plant. In order for a few operators to maintain the entire plant,
it is crucial that they can absorb much information from all parts of the process in a very
effective way and that all adjustments can be done in an available and effective way.
(Lyddby, Anders, 2008)
Advantages:
- Smart plant integration reaches across processing, packaging and logistics in order to
enhance production and accelerate time to market.
- Optimizing the plant is based on a reliable foundation of automation, which turns data
into actionable insights that pave the way for higher OEE (Overall equipment
effectiveness), reduced operational costs and minimal waste.
- Getting access to real-time production data, so you can make confident decisions and
further amplify all the benefits. Connecting your business also instantly expands your
team, giving you access to process and equipment expertise 24/7. (Tetrapak, n.d)
Disadvantages:
- Require experienced operators with profound understanding of the process. Because
there are some operators, their responsibility is heavy and a problem during the
production process could make the process come to a halt.
Tetra Plan Master system application in Vinamilk’s warehouse:
- The system enables Vinamilk to have entire control of the plant from incoming raw
materials to the processed, packaged and palletized products.
- Machines are integrated into one system and work in sync, helping to increase
efficiency and productivity far beyond manual operation.
- The LGV robot system automatically controlled by the central computer system will
be responsible for transferring the sterilized paper roll into the filling machine and
automatically transferring the finished goods to the smart warehouse. Thanks to that,
the factory can control the quality and production efficiency at the highest level.
2.1.5. Machines and equipments
a) Robots
The use of robots in the operation of smart warehouse has benefited the company in
many ways. With the help of robots and automated machines, Vinamilk is able to optimize its
operations, reduce labor costs, and improve productivity. The robots have also assisted the
business in enhancing the quality of its products and inventory management, ensuring that
the products are constantly accessible to customers. By utilizing the latest advancements in
robotics technology, Vinamilk has been able to stay ahead of the competition and meet the
constantly changing needs of its customers. The application of robots and automated
machines will be shown in the following:
- Laser Guided Vehicle (LGV) for Picking and Packing: Vinamilk's LGV robots can
handle products from a range of shapes and sizes and employ cutting-edge computer
vision and machine learning algorithms to identify and locate products. Robots
(LGV) take the form of automated transport vehicles that automatically transport, lift
and pick goods. Machines are integrated into one system and operate synchronously,
which enhances efficiency and capabilities beyond manual operation. In order to
ensure that the products are handled properly, the robots are also equipped with
sensors that enable them to determine the weight and dimensions of the products. To
optimize movements, the robots can also connect with other equipment and systems
in the warehouse, such as conveyor belts and automated storage systems. The director
of Tetra Pak Vietnam also added that the robots (LGVs) can charge batteries
themselves at automatic battery receivers without human intervention
 Figure 4. Laser Guided Vehicle (LGV) in Vinamilk’s smart warehouse
Source. VietnamPlus, 2016
- Quality Control Robots: The quality control robots at Vinamilk can inspect items for
defects or abnormalities such as cracks, leaks, and other types of faults using cameras
and sensor systems. They can then notify human workers so that they can take the
necessary measures.
- Inventory Management: Vinamilk's robots are a key factor of the inventory
management process. They are in charge of moving cargo pallets to and from the
storage racks and checking procedures. Equipped sensors and cameras of these robots
allow navigation through the warehouse without meeting physical obstructions. The
robots can also connect with other machinery and systems to optimize their motions.
- Autonomous Mobile Robots (AMRs): AMRs play an essential role in the operation of
the Vinamilk mega factory in general and of smart warehouse in particular. Apart
from transporting items to and from different areas within the warehouse, they can be
programmed to effectively perform tasks regarding inventory management, quality
control, and maintenance.
b) Rail Guided Vehicle (RGV)
"RGV" stands for "Rail Guided Vehicle". This is a type of automated guided vehicle
(AGV) used for material handling and transportation in warehouses. RGVs have been
installed by Vinamilk in the operation of its mega factory, especially in its smart warehouse
located in the province of Binh Duong. This is a part of Vinamilk's efforts to enhance the
efficiency and productivity within the operation.
RGVs have several functions as follows:
- Material Handling: Pallets, cartons, and other types of containers are just a few of the
things that the RGVs can handle. They can be programmed to move items to
particular locations inside the warehouse and can pick up and move objects weighing
up to 1,000 kg. In order to ensure that the items are delivered securely and safely, the
RGVs are also fitted with sensors that enable them to determine the weight and size
of the cargo they are transporting.
- Integration within Warehouse Management System: The RGVs can not only improve
productivity and efficiency by transporting goods quickly and accurately, they can
also boost integration and synchronization to enhance the system. The RGVs are able
to receive work assignments and instantly update others on their status. By this
interface, Vinamilk is able to monitor and optimize the performance and efficiency of
the RGVs' routing and scheduling.
The RGVs employed in Vinamilk's smart warehouse are produced by the Japanese
company, Daifuku. In Vinamilk, RGV is a pallet handling and conveying system with 370
meters of rails and 15 dynamic load trays, each capable of carrying 2 pallets. The RGVs are
able to safely and autonomously navigate through the warehouse thanks to a variety of
equipped sensors and navigational technologies. They can be programmed to carry out
inventory activities, including picking up and moving, delivering goods to predetermined
destinations. The ability to operate around-the-clock enables these robots to work without
rest periods, which has helped Vinamilk to save time and increase productivity at the same
time.
 Figure 5. Rail Guided Vehicle in Vinamilk’s smart warehouse
Source. Zing news, 2013
2.1.6. Automated storage and retrieval system (AS-RS)
AS-RS stands for automated storage and retrieval system and it is a type of
warehouse that uses an automatic storage system. This system has been used for a long time
and proved to be popular in factories and warehouses in developed countries such as the
United Kingdom, France, the United States, Germany,... AS-RS was created to meet the high
demand for import and export speed, as well as professional management in a harsh working
environment.
Working principles of ASRS:
The AS-RS warehouse is completely free from or requires very little human
involvement in case of the installation of automated conveying belts. Automated Storage and
Retrieval Systems work by using computer-controlled systems to automatically deposit and
retrieve loads from a defined storage area.
A system of conveyors and or automated guided vehicles is sometimes part of the
AS/RS system. These take loads into and out of the storage area and move them to the
manufacturing floor or loading docks. To store items, the pallet or tray is placed at an input
station for the system, the information for inventory is entered into a computer terminal and
the AS/RS system moves the load to the storage area, determines a suitable location for the
item, and stores the load. As items are stored into or retrieved from the racks, the computer
updates its inventory accordingly. (SRSI, n.d)
Vinamilk applies AS-RS into inventory activities:
Vinamilk applies AS-RS (Automated storage and retrieval system) shelves to
optimize warehouse area. This method combines a rack with a motorized crane. An
automatic crane system can be used to pick up items instead of manual forklift, therefore
allowing the shelf height to be raised to its maximum. Since Vinamilk needs to preserve dairy
products under more challenging storage conditions than typical products, the entire
transportation system run by software is more ideal than humans.

Figure 6. AS-RS model

Source. Bangtaihaitan, 2022
The operating system is built on Tetra Plant Master, an automation solution that
enables connectivity and integration across the whole plant, from raw materials to completed
goods. As a result, the factory has continuous control over all operations occurring there,
including those occurring in the warehouse, which enhances both production and
maintenance tasks.
2.2. The movement of goods within Vinamilk smart warehouse
Inventory management at Vinamilk involves three main processes: the process of
receiving raw materials, the process of internal movement of products, and the process of
delivering finished products. Each stage involves different departments.
2.2.1. The process of receiving raw materials

Figure 7. The process of receiving raw materials

Source. HR Department

The process of receiving raw material is carried out as follows: delivering fresh milk
directly from farms to the factories, filtration and cooling process at a storage station, and
storing in cold storage tanks.

With a system of 9 farms and 13 modern factories, Vinamilk has created an optimized
system for transporting raw material to factories. First, fresh milk will be transported from
the farms to the nearest factories in the shortest time possible. Vinamilk has established fresh
milk storage stations to directly receive milk from specialized transport vehicles. These
vehicles are also modern refrigerated tankers, capable of storing milk at temperatures below
6°C. These stations will include an automatic milk filtration system and a cooling system.
After going through these two processes, the milk will then be stored in large cold storage
tanks. At this place, the milk will be preserved at the highest quality, preparing for the next
production and packaging process.

Vinamilk's main raw materials are fresh milk, imported milk powder, and various
flavors. Among them, after removing impurities and testing for quality, fresh milk will be
imported into cold storage tanks as mentioned above. Most of the remaining raw materials
will be stored at normal temperatures, and to ensure their quality, the company follows the
FIFO (First In First Out) principle. Specifically, for each type of raw material, the material
that is imported into the warehouse first will be used in the first production process. Raw
materials are stored on AS-RS (Automated storage and retrieval system) shelves to optimize
warehouse area, with heavier materials placed on the bottom and lighter materials on top.
This method combines a rack with a motorized crane. Each shelf is labeled with a shelf
number, compartment number, name and code of the raw material, and these orders are also
recorded in the warehouse management system. Therefore, when searching for the location
of raw materials for warehouse input or output, entering the name or code of the raw material
into the system will save a lot of time, and the system will display the location of the
material, saving time for sorting and retrieving parts.

2.2.2. The process of internal movement of products

Figure 8. The process of internal movement of products

Souce. HR Department

From the production line, finished products will be transferred using automated
guided vehicles (AGV). This will then be put into a conveying system.

The connection from production is facilitated by a rail-guided vehicle system.

According to Carsten (2022), because of the high throughput and the future expansion plans
doubling the overall throughput, carriers can carry two pallets at a time have been
implemented. After that, products are loaded onto a high-bay warehouse with 27000
locations.

These finished products are then put into energy-saving storage and retrieval
machines. One special feature of this system is the warehouse management system WAMAS
(Carsten, 2022). In this particular case, WAMAS interfaces with the Oracle ERP system of
Vinamilk as well as the plant master in the production provided by Tetrapak. With this ERP
system, Vinamilk easily controls information about inventory such as inventory encoding,
inventory arrangement positions, receiving and delivering information of inventory as well as
reports on inventory, and orders from partners. WAMAS applied in Vinamilk is one of the
most advanced and modern warehouse systems in the world. The highlights of Vinamilk’s
WAMAS warehouse system are automated robots and the ability of the warehouse to store
27,168 pallets with earthquake-resistant capabilities. This system is faster, lighter, and more
energy-efficient than any previous generation with the same function. Moreover, the
automatic pallet storage system optimizes space, including conveyor belts that support
workers' loading and unloading operations, automatically sorting the order of pallets and
capable of retrieving any pallet. The entire system is controlled and managed by SSI
Schaefer's core software called Wamas Warehouse Management System. Combining
WAMAS and ERP allows Vinamilk to trace products throughout the production process all
the way to distribution loading to the truck.

In addition to sorting by each row, shelf, and compartment order like raw material
inventory, this finished goods inventory is divided into four main areas for storing ice cream,
sterilized milk products, yogurt, etc.

2.2.3. The process of delivering finished products

Figure 9. The process of delivering finished products

Source. HR Department
 When there is an order, the pallets will be transferred back to the rail-guided vehicle
system, heading to the case picking area. The pick case is automatically replenished from the
automated warehouse. Case picking is done using RF (Radio Frequency) technology pick to
pallet transported by order picking truck and, picked pallets are then fed back into the
automated warehouse (Carsten, 2022). The final step is the sequenced supply in the dispatch
area. These pallets will now be ready for the truck to deliver. At the shipping area, the
automatic pallet classification system is divided into 16 lanes according to the principle of
gravity roller conveyors.

3. General evaluation of warehousing management activities of Vinamilk

3.1. Advantages

First, Vinamilk can increase productivity & reduce costs when applying automation in
the warehouse. Automated warehouse systems operate more effectively and consistently,
increasing warehouse productivity, which helps reduce variable costs like manual labor cost,
operating cost and cut operation time like time-consuming operations or time for product
storage and retrieval.

Second, accuracy and optimization is increased in an automated smart warehouse

where the operation process is conducted continuously and smoothly by robots and is
integrated by software. Technologies and tools used in Vinamilk’s smart warehouse provide
insight into the entire process, which help detect problems and potential threats on an
ongoing basis, as well as control workflow and manage resources.

Third, Vinamilk could effectively utilize warehouse space. AS/RS systems can be
utilized in narrow aisles, allowing for increased storage space without facility expansion.

Fourth, Using sophisticated analytics and AI to operate smart warehouses can help
Vinamilk gain greater visibility into the orders processed by the warehouse and improve
supply chain planning. Hence, it is also easier to forecast future orders and help streamline
warehouse operations and reduce costs.

Fifth, the integration system helps facilitate communication between all departments
of the company and between factories, distribution centers and partners, which helps better
facilitate the order processing and create an advantage when dealing with emergency
situations.

3.2. Disadvantages

First, since almost all activities in the warehouse are automated, regular maintenance
and repair are required to ensure the smooth and efficient operation in the warehouse. This
will undoubtedly lead to some operational downtime as occasional repairs and maintenance
are made, especially when the production scale of Vinamilk’s smart warehouse is large.

Second, applying EOQ for inventory management would cause the shortages of raw
materials and products if Vinamilk has an inaccurate customer demand forecast. EOQ
requires accurate and efficient forecasting. Economic order quantity is based on the
assumption that demand for company’s products can be forecasted accurately but in real life
it is not possible because demand for a company’s product never remains constant throughout
the year. If there are any incidents that cannot be forecasted in which demand for goods of
the company rises or decreases substantially, the company will be likely to face stock-out or
excess inventory, causing significant costs to the business.

Third, Vinamilk's smart warehouse uses AS-RS (Automated storage and retrieval
systems), which includes a system of racks combined with an automatic crane system to
receive and deliver goods. The special feature of AS-RS is that the racks are very high, and
could fully utilize the storage space. Since the racks are high, it is very difficult to store bulky
goods which need to be put on a pallet.

Fourth, the case picking process still involves human intervention even though other
processes are conducted by robots. The workers load the goods onto the forklift truck and
transport it to the dispatch area, through which it would be scanned with RF (Radio
Frequency) by a staff, who then manually enters information into the system. This leads to a
higher risk of error than when carried out by robots, which would lead to more frequent
inaccuracies and inefficiency in the system.

4. Recommendations to improve the effectiveness of warehouse management activities

of Vinamilk

Vinamilk’s smart warehouse integrates numerous technologies and systems, and the
seamless operation of these systems has undoubtedly played a big role in the optimal
performance of the company. However, the company should ensure that these technologies
are compatible and can work together to achieve the desired results. Intense application of
technologies also means the company must take robust security measures as cybersecurity
risks associated with the use of IoT devices and other technologies in smart warehouses are
numerous, which can only be mitigated through the implementation of strong security
measures such as firewalls, encryption, and intrusion detection systems.

Regular maintenance and repair are also essential to ensure the smooth and efficient
operation of systems and devices in Vinamilk’s warehouse. Vinamilk should schedule regular
maintenance and repair activities to ensure that any potential issues are addressed before they
become major problems. This can help prevent downtime and equipment failure, which can
be costly and disrupt warehouse operations. In addition, regular maintenance and repair can
help prolong the lifespan of warehouse equipment, reducing the need for expensive
replacements.

Moreover, in order to keep up with the advancements in technology, it is crucial for

employees working in Vinamilk’s warehouse to receive regular and adequate training. The
specialized skills and knowledge required to operate the sophisticated equipment and systems
can be quite complex and overwhelming for workers who are not adequately trained. Proper
training ensures that employees have a thorough understanding of the equipment, its
functions, and its limitations. This not only ensures that workers can operate the technology
safely but also helps to improve their productivity and efficiency in carrying out their tasks.

The continuous automatic operation of machines and systems within Vinamilk’s

smart warehouse also poses a huge question for the business about a comprehensive safety
measures system in order to ensure safety for not only human resources but also among
operating machines and systems within the warehouse. They play an important role in
preventing accidents and injuries that can occur during the daily operations of the warehouse.
Although Vinamilk has equipped PPE (Personal Protective Equipment) and take certain
measures to ensure the safety of workers during the working process as well as building a
system of fire protection and execution, they have yet to implement clear signals and
markings for within the warehouse, which may pose as a difficulty or danger for workers in
navigating and avoiding potential hazards. Therefore, it might be advisable that Vinamilk
supplement a clear and thorough system of signals and markings, specific examples of which
could be floor markings, directional signals, hazard warnings, safety instructions and
inventory labeling. In short, these safety measures should be adequately implemented and
sensibly incorporated in order to minimize risks for workers, visitors as well as equipment.

On the other hand, the application of EOQ assumes that the demand for the product is
constant over the ordering period. However, in a warehouse setting, demand may fluctuate
due to seasonal trends, customer demand, or changes in production schedules. Therefore, in
order to mitigate the adverse effects of EOQ, Vinamilk should incorporate demand
variability. This can be done by using statistical methods such as forecasting or by using
safety stock to buffer against unexpected demand fluctuations.

EOQ is also designed to calculate the optimal order quantity for only a single product.
For Vinamilk, there are multiple products with varying demand and storage requirements,
making it difficult to apply EOQ to the entire warehouse. Vinamilk may resolve this problem
by applying ABC analysis, which categorizes products into groups based on their demand
and storage requirements, and can help optimize the ordering quantity for each product
group. This approach can provide more accurate and efficient ordering quantities than
applying EOQ to each product.

The case picking process still involves human intervention, specifically, the workers
load the goods onto the forklift truck and transport it to the dispatch area, through which it
would be scanned with RF (Radio Frequency) by a staff, who then manually enters
information into the system. Due to this, there is a high risk of human error, which can lead
to inaccuracies and inefficiency in the system as workers may make mistakes during the data
entry process and they might have limited capacity compared with machines. Therefore,
Vinamilk should enhance this procedure by applying automation. In particular, Vinamilk
could use an automated scanner using barcode or RFID (Radio Frequency Identification)
during the data entry step, which would reduce the risk of human errors and improve the
accuracy of the system. Furthermore, they could use robotics in the case picking process with
AGVs (Automated guided vehicles) or AMRs (autonomous mobile robots) to transport goods
to the dispatch area, eliminating the need for human intervention.

In today's highly competitive business environment, Vinamilk is put in a race to

embrace innovative technology solutions to remain competitive and gain a competitive
advantage. However, technology alone is not enough to achieve optimal warehouse
operations. Effective people management and efficient processes are equally crucial to the
success of smart warehouses. Vinamilk should identify the key areas that need improvement
and evaluate the performance of their warehouse systems regularly. They should also involve
their workforce in the evaluation process to obtain feedback on how the systems are
performing, identify areas of improvement, and address any challenges arising. Continuous
improvement is critical to maintaining a smart warehouse's efficiency and effectiveness. As
their businesses evolve and grow, their needs change, and technology advances, so must the
smart warehouse systems. Vinamilk should regularly review and update their processes and
technology to ensure they are aligned with their business goals and objectives. With a
well-coordinated effort between technology, people, and processes, Vinamilk can optimize
their warehouse operations and achieve increased productivity, reduced costs, and enhanced
customer satisfaction.

Conclusion

Proud of being among the top nutrition corporations both nationally and
internationally, Vinamilk has proved their competitive advantage and set their position in the
market. Behind the success story of Vinamilk is the combination of various factors, of which
is the continuous and optimal operation of Vinamilk smart warehouse in Binh Duong.

The research group of this study has gathered secondary data as well as applying
knowledge of the subject “Warehouse and Distribution Management” under the guidance of
Mrs. Nguyễn Thị Yến in order to conduct this study. The research group has suggested
several recommendations to improve the effectiveness of warehouse management activities
at Vinamilk smart warehouse in Binh Duong by analyzing the technological application and
the movement of goods within Vinamilk smart warehouse. However, due to the lack of the
company’s public data and the researchers’ capabilities, this study still has certain drawbacks.
 In the current digital economy race, Vinamilk as well as other organizations are put
under huge pressure to make successive technological improvements to advance their
competitive advantage on the market. From the study, the benefits that technology has
brought to Vinamilk is undeniable. However, it is critical that Vinamilk knows how to
integrate technological applications together with human resources to make the best use out
of them and achieve sustainable growth and success. On the other hand, there will still be
unexpected catastrophes that may act as an impediment to organizations in general and
Vinamilk in particular. Therefore, they should always be strategically prepared in order to
embrace themselves against those challenges and maintain their resilience.

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