Revealing Vinamilk’s inventory management activities

1. Information about Vinamilk's inventory management

1.1. Inventory management activities
1.1.1. Vinamilk and the EOQ model
A large company like Vinamilk, which accounts for more than 40% of the market share
in the Vietnamese market, will need to build a large warehouse system to store all the
milk during the distribution process?
In order to save inventory costs, inventory quantity as well as optimize business ability,
Vinamilk has used EOQ model in inventory management of the company.
Talking about EOQ model information, this is one of the models frequently applied by
businesses in inventory management. As inventory management businesses have built
themselves an "optimal shipment size". That is, the enterprise will calculate a maximum
amount of inventory in its warehouse, only produce and stock up to that norm to
minimize the costs of human resources, warehousing and inventory; while still able to
ensure stable and developed supply activities.
To establish this norm, Vinamilk has applied the inventory management formula EOQ
based on the following parameters: demand for raw materials in the year, one-time order
quantity, one-time ordering cost and cost raw material storage.
1.1.2. Inventory management
- With materials
Vinamilk has applied the EOQ inventory management model of raw materials. However,
in order to produce a finished product, the company must import a lot of different
materials, they differ in packaging, different suppliers, different delivery times as well as
order process,... Therefore, Vinamilk also needed to coordinate flexibly between both the
EOQ model and the actual situation.
Sometimes, the amount of raw materials needs to be imported more than usual according
to the experience or requirements of the people directly working in the warehouse,
especially in times of increased purchasing power or the company has incentive
programs, reducing prices and stimulate consumer demand.
- With finished goods
For finished products, Vinamilk builds an intelligent management system to control the
amount of goods in stock. At distributors, when the quantity of goods is lower than the
standard level, there will be announcements and updates to quickly coordinate reasonable
goods.
Because the number of goods in the warehouse is very large and there are many different
types of products, Vinamilk also applies technology in warehouse management. The
products are completely encrypted, when the warehouse staff comes to check the goods,
just scan the code to know the inventory quantity. These figures will be compared with
the actual quantity of goods in stock to limit losses.
Thanks to the code, employees can easily control the location of goods in the warehouse,
convenient for moving, and saving time. In case of being required to make an inventory
report, it is only necessary to export the report through technology software without
having to tally each product unit.
1.2. Inventory sorting activities
- With materials
In order to produce finished goods, Vinamilk needs to use fresh milk, powdered milk and
flavorings to serve the production process. To ensure food safety and hygiene, raw milk
will be removed from impurities, undergo a rigorous process to check quality, and then
be stored in a cold bath. As for other materials, they will be stored under normal
conditions.
Vinamilk's raw materials only have a certain shelf life, so Vinamilk arranges goods
according to the FIFO principle - that is, the materials that come in first will be used first.
The goods in the warehouse will be arranged on the shelves, the heavy materials will be
arranged on the low shelves and vice versa. These materials are also labeled differently
for easy management and warehousing.
- With finished goods
Products of Vinamilk will be divided into categories such as pasteurized milk, yogurt and
ice cream. Therefore, each category will require different storage conditions. Goods will
be arranged on cabinets and shelves according to the allowed norms, not overlapping too
much, affecting the quality.
In case the inventory exceeds the allowed storage limit of the company, the company will
store raw materials at rented warehouses and finished goods will be preserved at the
company warehouse. This is to ensure the quality of the finished product when it reaches
the customer.
2. Evaluation of Vinamilk's inventory management activities
Vinamilk's managers have been extremely flexible in controlling inventory through the
EOQ model - applying but not copying everything rigidly. The company was flexible in
each case, time, rise and fall in the market.
The application of product management through code also helps the company's
warehouse management team to save working time, save human resources and increase
efficiency in work and goods when entering and leaving the warehouse. also faster and
easier.
As a large enterprise itself, the company is also aware of the importance of managing
inventory by technology, using inventory management software, distribution system
management software in the company. to improve work performance. This is an
inevitable development in the future, the sooner a company approaches and embraces
technology, the more advantages it will have in business.
However, the application of the EOQ model in inventory management also causes
Vinamilk to encounter situations where there is a shortage of goods and raw materials
when it incorrectly predicts consumer demand.
The amount of inventory of each product category has a clear difference, there are many
goods that are over-stocked, but there are also goods that are in short supply for many
days, greatly affecting business operations and supply goods to distributors.
3. Solutions in inventory management for Vinamilk and businesses
The application of technology in production, management and sales is extremely
necessary. Businesses can apply sales management software, distribution channel
management software to manage all issues in the company: finance, goods, human
resources, inventory, orders, distributors. distributors, suppliers,.... All problems can be
solved by technology software.
Instead of recruiting many employees to manage these problems, now businesses can
minimize human resources and use these software to solve problems. The output report
data will be extremely accurate and easy. Check it out now!
Above is the entire content of Vinamilk's inventory management activities. Hopefully,
through this article, you will have more knowledge to serve your study and work.