HANOI UNIVERSITY OF SCIENCE AND TECHNOLOGY

SCHOOL OF ECONOMICS AND MANAGEMENT

_________________________________________________________

FINAL REPORT
Course title: Operation Manegement
Lecturer: Nguyen Thi Xuan Hoa
Class: Bussiness analytics

Members of group 2

Pham Thu Ngan 20223507

Pham Thuy Hang 20223468
Luong Thu Hoai 20220000
Pham Thi Minh Chien 20220000
Nguyen Thi Thanh Truc 20220000
Nguyen Thi Phuong Chi 20220000

Hanoi, 10/6/2024
I.

II. Current operation and analyze

 10 Strategic Decisions
1. Design of goods and services

 Consistency in quality: SABECO focused on maintaining consistency in the quality of

beer across all of its products, regardless of which factory it was manufactured in. This
can be achieved through the application of strict quality standards throughout the entire
supply chain, from the selection of raw materials to the production and packaging
processes.

- For example: 26 breweries have achieved reputable certificates of ISO 9001 (Quality
Management System), ISO 14001 (Environmental Management System), ISO 22000
(Food Safety Management System) and HACCP (Hazard Analysis and Critical Control
Points). In addition, the breweries have had laboratories accredited with ISO 17025 to
ensure beer quality throughout the entire system. Some breweries have also achieved ISO
50001 (Energy Management System) in 2023, while all employees have been trained
frequently on labor safety, food hygiene and safety as required by the law.

 Cost Alignment: SABECO may have sought to achieve cost efficiencies across all
business segments. monitor the market fluctuations for raw materials for production to
promptly develop a purchase plan with appropriate prices and quality to optimize
production costs as well as ensure sufficient supply.

 Sustainable Packaging:
- Recyclable materials: SABECO implements a sustainable packaging solution for its
product lines, using thinner, lighter cans to save fuel. At the same time, the business
implements a beer tank recycling program, calling on partners in the distribution network
across the country to participate, promote the responsibility of parties to handle post-use
packaging in the production and business process.

 Unification of resources: The company focused on the efficient use of its resources
across all business segments. This may involve sharing expertise and human resources
between different factories, as well as investing in technologies that can be deployed
across the company.
- For example: The Corporation also focused on conducting various training courses and
activities to build a stronger workforce and boost employee engagement. Conduct
training courses to improve the knowledge and skills in quality control as well as
implement periodical programs to evaluate employee capacity and quality control
effectiveness to continuously improve the current quality management system.
2. Managing quality
 Meet product quality requirements in accordance with the product quality declaration as
delivering quality and safe products to consumers is the main responsibility and objective
of the entire quality control process across the whole system.
- For example: In order to meet consumers’ increasingly dynamic and modern lifestyle
along with their demand for higher quality products, SABECO introduced its new
product called Bia Saigon Export Premium, including bottles and sleek cans, with a more
modern and premium feel, aiming to rejuvenate Bia Saigon Export with a new brand
positioning. This new product utilized a slow fermentation technique for a more
sessional, refreshing, and lighter taste, which is suitable for different groups of
consumers.

3. Process and capacity strategy

 Main products: SABECO produces a number of mainstream beers with large output
such as Saigon Beer, 333, in line with the concentration strategy.
 Diversified products: Besides, Sabeco also produces other products with lower output,
meeting its own market segments, in line with a more flexible strategy: Nam Phuong aloe
vera bird's nest water, Viva Vodka, ...

 Capacity: “SABECO continues to promote investment in infrastructure development and

increase production capacity to increase efficiency in business management and meet the
increasing demand of the market."
- Total production capacity: 2.4 liters/year.
- Nearly 13,000 direct employees throughout the system.
- Effectively using modern production technology, the equipment is imported from leading
European manufacturers such as Krones AG and KHS.
- Vertically integrated bussinesses: 26 breweries, 05 Packaging companies, 02
Liquor/alcohol companies, 02 Engineering companies, 01 Non-alcoholic beverages
company, 01 Real estate company.

4. Location strategy
- SABECO's products are present at 200000+ points of sale
- Focus on locating factories in big cities, close to major consumption areas, with quality
human resources and good infrastructure.
- The location near major transportation routes or seaports can be more convenient for
transportation, ensuring the transportation of products to dealers and retailers quickly and
efficiently.
- Although the factor of proximity to barley supply has little influence, Sabeco is still able
to find reliable suppliers worldwide.
5. Layout Strategy
Product Layout:

 Application: At SABECO's major breweries, which produce famous beers such as

Saigon Beer and 333. In these breweries, beer production lines are arranged continuously
from the stages of cooking, fermentation, filtration to bottling and canning.
 Benefits: Increased production efficiency, reduced production time and labor costs due to
highly automated processes.

Process Layout:

Application: In wine and beverage factories where there are many types of products with
different production processes. For example, the winemaking process may require
different equipment and stages than beverage production.
Benefits: Flexibility in handling a wide variety of products, optimizing the use of
equipment and space.

6. Human resources and job design

 SABECO is on its journey to build a stronger workforce, including attracting, retaining,
and developing talent with the required skills and capabilities as well as identifying
successors for key positions.
- Prepare succession plans and identify a talent pool for the development of SABECO.
- Set strategies to retain high-potential employees and provide talent development
programs to build up their capacity.
- Review the compensation scheme and performance evaluation system.
 SABECO commits to maintaining safe working conditions, taking care of both physical
and mental health and welfare of employees, focusing on employee development,
attracting talents as well as respecting differences and diversity in the workplace.
 Several technical staffs attended Brewmaster courses in the United States and Germany.
In 2023, SABECO had a total of 48 Brewmasters across the whole system. SABECO has
also invited many reputable organizations and specialists to provide technical training for
managers and plant operators to improve their skills. In addition, technicians also
participated in advanced training courses on yeast propagation, chemical and
microbiology analysis, beer sensory analysis, maintenance and management systems and
management systems according to international standards, along with technical seminars
the on beer and beverage industry to access and continuously update advanced techniques
around the world.

7. Suppy - chain management

 Like most businesses in the industry, SABECO also imports raw materials from abroad.
SABECO's main sources of raw materials (hops, malt grains, ...) are all imported from
reputable suppliers in Europe.
(Due to 100% imported raw materials and the influence of weather conditions, the
supply is often insufficient to meet the actual demand, leading to increasing pressure on
input material prices.)
 Under condition
- To ensure the supply of natural raw materials for the production process, SABECO has
implemented a number of analysis and quality control steps. First, the company
conducted a survey and searched for companies with real competence in the industry,
using a variety of aspects to make the most suitable and cost-effective final selection.
- Then, SABECO's inspection team will apply international, Vietnamese standards and
the company's own criteria to check the quality of the supplier's goods. Criteria include
ensuring on-time delivery according to the contract, clear and transparent contracts, and
prices must be in line with the goals set by the company.

- Other materials such as packaging, glass products, cans, supplied from subsidiaries
within the group with controlled quality. Sai Gon Beer Packaging Joint Stock Company
(Producing and trading tin lid rings and metal packaging, packaging for food and
beverage industry), Malaya - Vietnam Glass Limited (Manufacturing glass products),
Crown Beverage Cans Saigon Limited (Manufacturing aluminum cans) ...

8. Inventory management
Factors affecting Sabeco's ordering and holding strategy in 2023:
 First, seasonal demand: The demand for Sabeco's beer often increases during Tet
holidays, summer and major sporting events. Sabeco needs to accurately forecast demand
to order raw materials and finished products in a timely manner, avoiding shortages or
excessive inventory.
 Second, delivery time: Delivery time from raw material suppliers can affect the amount
of inventory needed. Sabeco needs to calculate a reasonable delivery time to ensure
continuous production and avoid interruptions due to lack of raw materials.
 Third, storage costs: Keeping too much inventory will lead to high storage costs.
Sabeco needs to balance meeting customer needs and minimizing storage costs.

9. Scheduling
 From 2024 onwards, the Corporation has planned to implement new initiatives to further
transform its business operations team, such as the Sales and Operations Planning System
(S&OP) to systematize production planning, the Enterprise Resource Planning System
(ERP) to standardize processes and data management, and Production System to improve
the efficiency of the production line and quality management.

10. Maintenance
 Maintenance and upgrading of machinery, technology, and infrastructure to save energy.

- Sabeco selects and applies types of Maintenance (including preventive maintenance,

breakdown maintenance) in accordance with each type of machinery and equipment and
the specific needs of the factory. Thanks to the effective application of Maintenance
strategies, Sabeco has ensured safe, efficient and cost-effective production activities,
contributing to the success of Vietnam's leading beer brand.
- In addition, Sabeco also focuses on training and developing technicians, helping them
improve their professional qualifications and skills to perform effective maintenance
activities.
- Sabeco has 1 subsidiary of its own (Sa Be Co Mechanical Co., Ltd) For system
maintenance: (Manufacturing equipments used in food manufacturing, installing and
maintaining machinery system and equipment)

 Wastes in SABECO

Seven wastes are:

 Overproduction: When demand forecasts are inaccurate, Sabeco may produce more than
the actual amount of beer needed, leading to increased inventory and storage costs.
- For example:
Beer production exceeds demand: During the Tet holiday, Sabeco forecasts that the
demand for beer will increase, so it has produced a large amount of beer. However, after
the holiday, demand plummeted, leading to a large amount of beer in stock that could not
be consumed, causing waste of production and storage costs.
Early production: Sabeco produces a large batch of Tiger beer before there is a specific
order from distributors. Due to the wrong forecast, this beer is in stock for a long time, at
risk of expiration.

 Queues: When the machine fails or lacks raw materials, the production process stalls,
causing unnecessary waiting time.

 Inventory:
- Excess raw materials: Stockpiling too many raw materials such as barley and hops,
leading to the risk of damage.
- Unfinished products: Unfinished product inventory is not managed effectively, causing
a waste of space and resources.
- Excess finished products: Finished product inventories are not consumed in time,
especially during the off-peak season.
- In inventory as of December 31, 2023, there are VND 75,580 million (January 1, 2023:
VND 78,973 million) of inventory that is outdated, or slow to circulate and difficult to
consume.

 Motion: Employees have to move back and forth between production areas due to the
unreasonable factory layout, causing waste of time and energy.
- Suboptimal design: The production and packaging equipment is not arranged according
to a reasonable process, resulting in workers having to move more to get the job done.

 Overprocessing: Performing unnecessary quality checks or using too many raw

materials in the production process, which increases costs without adding value to the
product.
 Defective product:
- Manufacturing errors: Errors in the process of brewing, fermentation, or bottling lead
to products that do not meet quality standards.
- Defective packaging: Packaging errors such as incorrect or damaged labels.
- Defective products: Unsatisfactory products that must be removed or reworked.