HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

SCHOOL OF INDUSTRIAL MANAGEMENT

🙞···☼···🙜

GROUP PROJECT
MANAGEMENT INFORMATION SYSTEM
TOPIC: MANAGEMENT INFORMATION SYSTEM
IN SUPPLY CHAIN MANAGEMENT SYSTEM OF
HEINEKEN
CLASS CC02 --- GROUP 07 --- HK 231
DATE: 07/12/2022
Instructor: Mr. PHẠM QUỐC TRUNG

Student’s name Student’s ID Contribution

Phạm Ngọc Thảo Ngân 2053259 100%

Cao Văn Hoàng 100%

Đỗ Phạm Hoàng Phúc 2053335 100%

Trần Nhật Quang 2053364 100%

 Ho Chi Minh city-2023

Chia vic
#Hoàng:

Làm phn : ABSTRACT, CONCLUSION, PPT, CONTENT (CHỮ ĐỎ) - Tui

có ghi tên ở dưới rồi
Link làm PPT: Canva

Gi ý làm PPT: Link

Deadline:

PPT: Th 3, 21h ngày 28/11 (Đợi Phúc và Hoàng chỉnh sửa xong
nội dung rồi làm luôn nha).
ABSTRACT, CONCLUSION, CONTENT (CHỮ ĐỎ): CN, 21h ngày
26/11
#Quang

Làm phn :
REPORT, REFERENCE, CHECK NI DUNG VÀ RÚT GN CHO PHÙ HP (
PART 2: LITERATURE REVIEW, PART 3:
METHODOLOGY, PART 4: MIS IMPLEMENTATION IN HEINEKEN'S
SUPPLY CHAIN MANAGEMENT).
Deadline:

Check ni dung: CN, 21h ngày 26/11

Report: Th 3, 21h ngày 27/11

#Phúc

Làm phn : CHECK NI DUNG VÀ RÚT GN CHO PHÙ HP ( PART 5:

SCM - WAREHOUSE PROBLEM IDENTIFICATION, PART 6: IMPROVEMENT
SCM - WAREHOUSE FOR COMPANY)

2
Deadline:

Check ni dung: CN, 21h ngày 26/11

3
TABLE OF CONTENT

4
ACKNOWLEDGEMENT

The successful culmination of our project was made possible through the invaluable
guidance and support of numerous individuals. Foremost among them, we wish to convey
our deepest appreciation to Dr. Pham Quoc Trung, our instructor in Management
Information Systems, for affording us this remarkable opportunity and delivering
invaluable guidance throughout the duration of the course. Through dedicated study,
extensive research, and the invaluable guidance of Dr. Pham Quoc Trung, our group
significantly enhanced and successfully completed our Management Information Systems
group assignment.

Our heartfelt thanks extend to the lecturers of the Management Information Systems class
at HCMC University of Technology, as well as various external sources of knowledge
and materials, for providing the essential foundational knowledge and contributing to the
successful execution of our project.

We also wish to extend our gratitude to all team members, whose individual contributions
were integral in bringing this project to fruition. Lastly, we express our appreciation to
everyone who directly or indirectly supported us in bringing this project to a successful
conclusion.

5
ABSTRACT - HOÀNG
During MIS course, we are provided with a deep understanding of information
technology, business, and management principles to develop and implement information
systems that support the decision-making needs of organizations. The course is
reasonable for who wants to be a MIS professional design, develop, implement, and
maintain information systems that collect, store, analyze, and distribute data to help
managers make informed decisions. Thanks to provided knowledge in this course, we can
conduct this report providing an overview of a Management Information Systems (MIS)
course focused on the Supply Chain Management (SCM) practices of Heineken, a
leading global brewing company. We have evaluated how Heineken utilizes information
systems and technology to optimize its supply chain operations, improve efficiency, and
enhance customer satisfaction. As a result, our mission in this report:
● Find out briefly about the organization or the company and the problems it is
facing
● Learn about information management systems and general assessmen in SCM
● Analyse the detail of the Heineken’s SCM system and find out the pros and cons
of this system
● Recommend a evaluation to improve the SCM system of Heineken
PART 1: INTRODUCTION
1. Background information on Heineken's Company

Figure 1: Heineken Profile

6
 Figure 2: The Products of Heineken

Heineken, a brewing powerhouse with a legacy dating back to 1864, has evolved
into a global force, known for iconic beer brands such as Heineken, Amstel, Tiger, Sol,
Strongbow, and Birra Moretti. Operating in over 70 countries, the company's
commitment to delivering quality beverages has made it a beloved choice worldwide.

In Vietnam, the Vietnam Brewery Limited Company (Heineken Vietnam) stands

tall as a major player in the beer industry. Established in 1991 as a joint venture between
Saigon Trading Corporation (Satra) and Heineken Asia Pacific, the company has
experienced remarkable financial growth. The first quarter of 2021 saw a 20% increase in
revenue, reaching VND 4.4 trillion, accompanied by a substantial pre-tax profit of VND
1.1 trillion.

Heineken Vietnam's strategic investments in advanced manufacturing technology

are exemplified by a USD 6 million state-of-the-art beer production facility established in
2021. This underscores the company's commitment to innovation and efficiency.

7
 The significance of logistics and supply chain management in Heineken's success
cannot be overstated. The merger of Heineken Vietnam Brewery Company Limited and
Heineken Hanoi Brewery Company Limited reflects the strategic importance of these
operational facets. Through meticulous supply chain optimization, Heineken enhances
customer service, trims operational expenses, and strengthens its financial standing. The
company's expanded logistics and supply chain operations in Vietnam contribute not only
to local employment, supporting over 158,000 jobs, but also to environmental
sustainability, aligning with Heineken's responsible business practices highlighted in the
2017 Sustainability Report.

Heineken's journey in Vietnam encapsulates a harmonious blend of brewing

excellence, strategic investments, and a commitment to responsible business practices,
solidifying its position as a leader in the global beverage industry.

2. Management Information Systems (MIS) of Heineken

The application of an Information Management System, particularly Supply Chain

Management (SCM), into the business model of Heineken Company has proven to be a
strategically sound decision, yielding substantial benefits for the organization. By
incorporating SCM, Heineken has enhanced its ability to manage and optimize various
elements of its supply chain, leading to increased efficiency and streamlined operations.
This application has facilitated real-time monitoring and coordination across the entire
supply chain, from production to distribution. As a result, Heineken has experienced
improved inventory management, reduced lead times, and minimized operational costs.
The strategic implementation of SCM has not only increased the overall effectiveness of
Heineken's supply chain but has also contributed to the company's competitiveness in the
market by ensuring a more agile and responsive approach to changing market demands
and dynamics.

8
PART 2: LITERATURE REVIEW

1. Definition Supply Chain Management

APICS, the global association for supply chain management professionals, defines
supply chain management as: “The design, planning, execution, control, and
monitoring of supply chain activities with the objective of creating net value, building a
competitive infrastructure, leveraging worldwide logistics, synchronizing supply with
demand, and measuring performance globally.”

Step 1 - Design: Identify key supply chain partners, determine the optimal network
structure, and design processes for efficient flow. Consider factors such as product
characteristics, demand variability, and lead times.

Step 2 - Planning: Forecast demand, create production and procurement plans, optimize
inventory levels, and establish communication channels with suppliers and customers.
Planning should also account for potential disruptions and risk mitigation strategies.

Step 3 - Execution: Procure materials, manufacture products, and coordinate the

movement of goods from suppliers to manufacturers to distributors and, ultimately, to
customers. Real-time visibility and communication are crucial during execution to
address any unforeseen issues promptly.

Step 4 - Control: Implement control mechanisms to track performance metrics, monitor

inventory levels, and ensure quality standards are met. Establish procedures for handling
exceptions and deviations, and continuously evaluate and adjust the supply chain
processes for optimal performance.

Step 5 - Monitoring: Use key performance indicators (KPIs) to track the effectiveness of
the supply chain. Monitor factors such as delivery times, inventory levels, and customer
satisfaction. Regularly analyze data to identify trends and areas for optimization, and
implement continuous improvement initiatives.

9
 2. How Supply Chain Management Works

Supply chain management represents an ongoing effort by companies to make

their supply chains as efficient and economical as possible. Typically, SCM attempts to
centrally control or link the production, shipment, and distribution of a product. By
managing the supply chain, companies can cut excess costs and needless steps and
deliver products to the consumer faster. This is done by keeping tighter control of internal
inventories, internal production, distribution, sales, and the inventories of company
vendors.

SCM is based on the idea that nearly every product that comes to market does so
as the result of efforts by multiple organizations that make up a supply chain. Although
supply chains have existed for ages, most companies have only recently paid attention to
them as a value-add to their operations.

5 Phases of Supply Chain Management:

Planning: To achieve optimal results in Supply Chain Management (SCM), the

process typically commences with meticulous planning aimed at aligning supply with
customer and manufacturing demands. Companies must proactively anticipate their
future needs, considering factors such as raw materials, manufacturing stages, equipment
capacities, and staffing requirements. Enterprise Resource Planning (ERP) software is
often employed by larger businesses to facilitate the coordination of this planning phase.

Sourcing: The effectiveness of SCM heavily relies on robust relationships with

suppliers. Sourcing involves collaborating with vendors to procure materials essential to
the manufacturing process. While sourcing requirements may vary across industries, the
overarching goals of SCM sourcing are to ensure that raw materials meet manufacturing
specifications, vendor prices align with market expectations, the vendor can provide
emergency materials, and the vendor has a proven track record of timely and quality
deliveries. For industries dealing with perishable goods, supply chain management

10
becomes particularly critical, requiring careful consideration of lead times and the
supplier's capacity to meet demands.

Manufacturing: The core of the supply chain management process lies in

manufacturing, where companies utilize machinery and labor to transform raw materials
received from suppliers into the final product. This phase may encompass sub-tasks such
as assembly, testing, inspection, and packaging. Companies must remain vigilant during
manufacturing, addressing issues like waste or deviations from original plans promptly.
For instance, if a company exceeds planned raw material usage due to inadequate
employee training, corrective measures must be taken.

Delivery: Upon completion of the manufacturing process and finalizing sales, the
next step is ensuring the timely, safe, and cost-effective delivery of products to
customers. Effective SCM involves establishing robust logistic capabilities and delivery
channels, including contingency plans for alternative distribution methods in case of
transportation disruptions, such as record snowfall in distribution center areas.

Returns: The SCM process concludes with product support and managing
customer returns. Handling returns, often referred to as reverse logistics, is crucial for
addressing customer dissatisfaction or product-related issues. Companies must possess
the capability to receive returned products, issue correct refunds, and use returns as
valuable feedback to identify and rectify defects or design flaws. Addressing the root
cause of customer returns is essential for the success of the supply chain management
process, preventing persistent issues and improving overall customer satisfaction.

11
4 parties and 3 flows in a supply chain

There are 3 types of main flows that happen in any supply chains:

● Product flow: happens all the way from the upstream (suppliers) to the
downstream (retailers, customers). In addition, if there is any returns for any
reason, there will be a reverse flow of product in the opposite direction to the
forward flow.
● Payment flow: happens from downstream to upstream. Payment is typically made
after the buyer receives the product and inspects it, at which point the funds return
to the provider. Occasionally, money moves in the opposite direction from
supplier to customer in the form of a debit.
● Information flow: happens both ways in the supply chain since organizations will
need to share different type of information with each other so that the whole
supply chain can make better decisions to improve overall performance.

Figure 3: Key Supply Chain Management Processes

What makes an excellent supply chain?

12
There are 5 pillars of an excellent supply chain:

● Organization design: Success in the supply chain requires a well-organized

company. The organization should have the appropriate personnel in the
appropriate positions and should be in line with the overarching company
objectives.
● Process: The supply chain process should be efficient and effective. This means
that the right steps should be taken in the right order to get products from suppliers
to customers as quickly and cheaply as possible.
● Systems and Technology: Systems and technology serve as the backbone of the
supply network, integrating processes and ensuring that all stakeholders operate
from the same source of real-time data.
● People: The people who work in the supply chain are essential to its success.
Skilled employees are equipped to effectively manage and optimize supply chain
operations. They also have Possessing a strong process orientation and an
understanding of the end-to-end supply chain as a cohesive entity.
● Supply chain metrics: A comprehensive system of performance metrics is
employed to evaluate performance against established benchmarks, enabling the
identification of areas for reinforcement and improvement.

13
 Figure 4: 5 pillars

KPIs in supply chain management are measurable values that are used to track and
evaluate the performance of a supply chain. The figure 5 mentioned 5 sections:

● Reliability: The capacity to fulfill task requirements effectively and efficiently.

14
● Responsiveness: is the ability of a supply chain to meet customer demand quickly
and accurately. The KPIs in this category include on-time in full delivery, quality
pass rate, and forecast accuracy.
● Agility: is the ability of a supply chain to respond to changes in customer demand
or market conditions quickly and effectively. The KPIs in this category include
product mix flexibility and adaptability.
● Cost: is the total cost to operate the supply chain. This includes the cost of
materials, labor, and transportation. The KPIs in this category include material
cost, labor cost, and week of supply for inventory.
● Asset utilization: is the efficiency with which an organization utilizes its assets to
generate revenue or achieve other objectives. It is a measure of how effectively an
organization is able to extract value from its assets

Figure 5: KPIs of Supply Chain

Explain theory thêm: - HOÀNG

15
 3. What is Warehouse management ? - HOÀNG

Warehouse management refers to the process of efficiently controlling and overseeing the
operations within a warehouse. It involves the systematic management of inventory,
storage, and movement of goods within a warehouse facility to ensure optimal utilization
of space, accurate tracking of inventory, and timely fulfillment of orders.

There are several key aspects of warehouse management:

● Inventory Control: Warehouse managers are in responsible for keeping correct

inventory records, monitoring stock levels, and providing that products will be
available when needed. To optimize stock levels, this entails tasks like receiving,
examining, and storing incoming inventory as well as performing frequent stock
audits and putting inventory management systems in place.
● Storage Optimization: In order to maximize storage capacity and enable the
smooth flow of goods, effective warehouse management requires establishing and
organizing the warehouse's layout. This entails choosing appropriate storage
solutions (such as pallet racking and shelving), putting effective picking and
replenishment plans into practice, and making use of space-saving tactics to
reduce waste and enhance accessibility.
● Order Fulfillment: Accurate and effective processing of customer orders is the
responsibility of warehouse managers. This include selecting the appropriate
goods from the shelves of the warehouse, safely packing them, and organizing the
shipping or delivery procedure. Order accuracy is increased and processing times
are decreased by automating and streamlining these procedures with the help of
warehouse management systems.
● Warehouse Operations: Warehouse managers supervise a range of operational
tasks in the warehouse, such as receiving and shipping merchandise, handling
returns and exchanges, maintaining machinery and equipment, and making sure
safety rules are followed. They might also be in charge of allocating duties,

16
 supervising a group of warehouse employees, and offering training to guarantee
efficient operations.
● Technology Integration: Warehouse management has been greatly enhanced by
the integration of technology. This helps managements improve efficiency,
accuracy, and productivity within the warehouse.
4. What is the SAP EWM platform?

The SAP EWM (Extended Warehouse Management) offers a range of benefits that
can greatly enhance your warehouse management processes. With SAP EWM, you can
automate your entire warehouse management, leading to accurate stock forecasting. This
automation helps streamline operations, reduce errors, and improve overall efficiency.
Additionally, SAP EWM allows you to optimize movements and transportation within
your warehouse, ensuring that goods are efficiently transported from one location to
another. By making optimal use of storage space, SAP EWM helps you maximize your
warehouse capacity and minimize wasted space. Furthermore, SAP EWM facilitates
smooth operations across all departments involved in shipping, transportation, relocation,
and warehousing. This comprehensive solution integrates various processes, enabling
seamless coordination and collaboration among different teams. Overall, SAP EWM
empowers businesses to achieve efficient and effective warehouse management, leading
to improved productivity and customer satisfaction.

The benefits from SAP EWM: Have a lots of benefits in their business result as:

Firstly, costs reduction thanks to optimized usage of warehousing space and

efficient resource management.

Secondly, increased speed of warehouse operations and improved throughput.

Thirdly, improved warehousing services and better customer experience.

In the last one is reduced returns and lower reclamation costs.

17
18
PART 3: METHODOLOGY
1. Data collection method

In this report, we use “The one-to-one interview” to evaluate the MIS of Heineken,
especially the Supply Chain Management System. The reason why this study conducted
individual interviews is because it allows for in-depth exploration of the participants'
experiences and insights. Furthermore, by conducting individual interviews, we can
gather rich and detailed data about the participant's thoughts, feelings, and actions. The
data for this study includes 2 types: primary data and secondary data. By using 2 kinds of
data, we can easily compare them and find out which strategies are suitable for each
situation.

2. Primary data

N.O Questionnaires Answers

1 Is there any important

information or insights about Technology plays a pivotal role in our supply chain
Heineken's supply chain that management. We employ advanced data analytics,
you think would be important demand forecasting models, and inventory
to know? management tools to optimize production, reduce
waste, and ensure the availability of our products.
This technological integration enables us to achieve
greater efficiency and responsiveness in meeting
consumer demands.

2 How often does the

warehouse go through Conducting regular inventory checks and audits is
inventory checks and audits? crucial for several reasons. Firstly, it helps us
maintain accurate records of our stock levels,
ensuring that we always have the right products
available for our customers. Secondly, it allows us to
identify any discrepancies or potential issues
promptly, such as missing or damaged items. By
doing so, we can quickly rectify any problems and
minimize any delays in our supply chain. Our
inventory checks involve physically counting and
verifying the stock on hand against our records.

3 How is the warehouse First and foremost, our warehouse follows a

organized to ensure efficient carefully planned layout that maximizes space
storage and retrieval of utilization and streamlines operations. We employ a
products? combination of manual and automated processes to
ensure efficiency.

19
 To begin with, we categorize products based on their
characteristics, such as size, fragility, and expiration
date. This enables us to assign proper storage
locations and handling protocols for each item. We
also implement a robust inventory management
system that tracks the availability, quantity, and
location of every product in real-time.

In terms of spatial organization, we employ a

systematic approach by dividing our warehouse into
different zones and aisles. This zoning strategy helps
us group similar products together for easy retrieval
and minimizes unnecessary movement. Additionally,
we label all zones, aisles, and sections clearly, which
allows employees to locate products quickly and
accurately.

4 How does Heineken optimize

warehouse management to With this problem, we must learn with relevant
minimize storage waste and departments to make the most accurate forecasts and
increase supply efficiency? supply plans possible using advanced technologies
and supply planning methods to predict market
demand. In addition, we also use investment tracking
and warehouse management technologies and these
systems help us have accurate information about
inventory and manage warehouse operations
effectively.

5 Can you tell us about any Firstly, we have implemented advanced technology
recent innovations or and automation systems to streamline our warehouse
improvements made to the processes. This includes the adoption of state-of-the-
warehouse operations? art inventory management software that allows us to
track and monitor our stock levels with increased
accuracy and efficiency. It enables us to minimize
errors, reduce wastage, and optimize our inventory
levels to meet customer demands effectively.

Furthermore, we have integrated RFID (Radio

Frequency Identification) technology into our
warehouse operations. This technology has
significantly improved our inventory tracking
capabilities. With RFID tags attached to our products
and pallets, we can easily track their movement and
location within the warehouse.

20
 However, despite our implementation of technology
and methods in warehouse management, we have not
yet optimized this process, and there are still
significant costs incurred in the warehouse
department.

6 How does Heineken monitor

and evaluate supply chain We establish KPIs to evaluate supply chain
performance? performance on key criteria such as inventory transit
times, order accuracy and responsiveness. Measuring
and tracking these metrics period helps us detect and
resolve problems as they arise. We must also
evaluate our partners and suppliers according to our
own criteria to ensure quality is maintained at the
best possible level. From there we can work closely
with supply chain partners to share information and
monitor performance.

7 Is there a multi-sourcing As we mentioned before, we must always establish

strategy? How to reduce risks long-term relationships with suppliers and
from dependence on a single diversifying our supply is inevitable. This helps us
source of supply? ensure a stable supply and quality of raw materials
before entering the production stage.

8 How does Heineken maintain

product quality during Our products are packaged and canned carefully.
transportation and storage? During transportation to ensure the temperature is
always at a suitable level without affecting the
quality of the beer. Transportation times must be
optimized so that products are not exposed to
unwanted external conditions. In addition, we must
train our employees and delivery partners to ensure
they meet the quality and safety standards set by
Heineken.

9 Is there an emergency plan

and rapid recovery when We always have emergency plans and quick
there is an incident in the recovery to deal with supply chain incidents such as
supply chain? delivery delays, environmental impacts or technical
difficulties. We establish planning processes to
ensure emergency measures are implemented and
supply operations can recover quickly. We must
assess the possible risks, resulting from developing a
response plan, training the emergency response team

21
 to create effective communication systems and
coordinating with relevant partners.

10 How does Heineken integrate

sustainability into its supply At HEINEKEN Vietnam, we hope through our
chain management? production and business activities to create
motivation for positive changes. With significant
contributions to the local economy, creating jobs and
supporting businesses in the supply chain, we want
to grow in parallel with the development of the local
community, creating value. common for the
economy and contribute to building a transparent and
competitive business environment to promote
domestic investment.

3. Secondary data

According to the data analysis and processing process we have found through academic
journals, company reports and publications, online resources, and especially the previous
interview we have done, we assume that there are several difficulties in the Heineken
supply chain management system. Particularly, they have stuck with the Warehouse
Management Information System. This greatly affects the process of preserving and
transporting products to customers completely. As a result, instead of quite a good system
in supply chain management, there are still several problems that we have mentioned.
Based on the evaluation, we will provide some solutions to make this system better.

22
PART 4: MIS IMPLEMENTATION IN HEINEKEN'S SUPPLY CHAIN
MANAGEMENT

Step 1 - Design

Heineken's supply chain design is meticulously crafted to align with the company's
strategic objectives. The design phase involves identifying key partners, establishing an
optimal network structure, and defining efficient processes. Heineken considers various
factors such as product characteristics, demand variability, and lead times to create a
robust and responsive supply chain design.

1. What are the components of the supply chain for Heineken?

The supply chain for Heineken, like that of any beverage company, involves
several key components.

Procurement: This component involves sourcing raw materials required for

brewing beer. For Heineken, critical raw materials include barley, hops, yeast, and water.
Procurement teams work with suppliers to ensure a steady and high-quality supply of
these ingredients.

Production: This is where the brewing process takes place. It includes mashing,
fermentation, maturation, and packaging of the beer. Heineken has numerous breweries
worldwide where these processes occur.

Distribution: Once the beer is brewed and packaged, it needs to be distributed to

various locations, including wholesalers, retailers, bars, and restaurants. Efficient
distribution is crucial to ensure the availability of Heineken products in the market.

Warehousing: Warehouses play a critical role in storing both raw materials and
finished products. Heineken maintains warehouses strategically located in different
regions to support its production and distribution network.

Transportation: Effective transportation is essential for moving raw materials to

the breweries and finished products to distribution points. Heineken uses various modes
23
of transportation, including trucks, ships, and sometimes trains, depending on the location
and scale of operations.

Inventory Management: Managing inventory levels is crucial to ensure that the

right amount of beer is available when and where it's needed. Advanced forecasting and
inventory management systems are often employed to optimize this component.

Quality Control: Maintaining the quality and consistency of Heineken's products

is paramount. Quality control processes are integrated into every stage of the supply
chain, from raw material inspection to final product testing.

Demand Planning: Accurate demand forecasting helps Heineken anticipate

market needs and plan production accordingly. This involves analyzing market trends,
historical sales data, and other factors that influence beer consumption.

Supplier Relationships: Building solid relationships with suppliers is essential to

ensure a reliable supply of raw materials and other inputs. This can include long-term
contracts and partnerships.

Sustainability and Environmental Initiatives: Many companies, including

Heineken, are increasingly focused on sustainability. This involves efforts to reduce the
environmental impact of the supply chain, such as energy-efficient operations, waste
reduction, and sustainable sourcing practices.

Compliance and Regulations: Heineken must adhere to various local and

international regulations related to alcohol production, labeling, and distribution.
Compliance with these regulations is an integral part of the supply chain.

Technology and Information Systems: Modern supply chains rely on advanced

technology and information systems to track inventory, monitor production processes,
and optimize logistics. This includes the use of Enterprise Resource Planning (ERP)
systems and other software tools.

24
 2. What are the different firms involved in the supply chain and their objective?

Figure 6 - Heineken Supply Chain Model

The objective in the supply chain of Heineken Vietnam, like any other company,
would typically include ensuring a smooth flow of products from manufacturing to
consumers while minimizing system costs and maximizing system service levels.

Suppliers: Suppliers in Heineken Vietnam's supply chain play a role in providing

raw materials and components necessary for beer production. Suppliers aim to provide a
consistent and reliable source of raw materials, such as malt, hops, barley, and packaging
materials, to meet Heineken Vietnam's production needs. Besides that, suppliers also
strive to maintain high-quality standards, timely deliveries, and competitive pricing to
meet Heineken's demand. They make an effort to establish long-term partnerships with
Heineken, fostering trust and collaboration to optimize efficiency and reduce costs.

Factory or Company: Ensuring a sufficient and continuous supply of vital inputs

for manufacturing is the main goal of the Heineken factory. In order to meet the needs of

25
its brewing operations, Heineken strives to maintain ideal inventory levels of raw
ingredients such as water, yeast, hops, and malts. Heineken can prevent stockouts and
production interruptions and ensure a smooth and continuous manufacturing process by
constantly monitoring inventory levels and forecasting future needs. In addition, the
Heineken company focuses on ensuring the quality and freshness of raw materials by the
quality control processes, including inspections, testing, and proper storage conditions to
preserve their quality attributes.

Manufacturers or Producers: The central objective is to efficiently and

consistently produce Heineken beer in accordance with the company's established recipes
and quality standards. It is crucial to guarantee the beer's consistency in taste and quality.
To uphold the high standards associated with the Heineken brand, stringent quality
control procedures are in place. In order to reduce waste, energy use, and production
costs while preserving product quality, they must also maximize efficiency in the
brewing process.

Distributors or Wholesalers: Distributors or wholesalers purchase products in

bulk from manufacturers or producers and distribute them to retailers or other customers.
All throughout the world, we distribute our beverages. We distribute our alcoholic
beverages to customers in both emerging and developed areas through partnerships and
acquisitions, our operational companies and subsidiaries, wholesalers, retailers, pubs,
hotels, taprooms, and bars.

Retailers: Retailers are the final stage of the supply chain, where products are sold
directly to consumers. They operate physical stores, e-commerce websites, and other
retail outlets. Moreover, retailers want to give outstanding services while exceeding
customer expectations in order to maximize satisfaction.

Step 2 - Planning

1. Planning for the entire supply chain

26
 In the planning phase, Heineken forecasts demand, develops production and
procurement plans, and optimizes inventory levels. The company establishes effective
communication channels with suppliers and customers, anticipating potential disruptions.
Heineken's planning also incorporates risk mitigation strategies, ensuring a proactive
approach to challenges that may arise during the execution phase.

Heineken has developed a comprehensive plan to optimize their supply chain,

encompassing detailed steps as follows:

Demand Analysis: Heineken conducts meticulous analysis of market demand,

particularly during significant events like year-end holidays. This includes a detailed
evaluation of consumer trends and predicting sudden spikes in demand to prepare for
such occasions. They applied the pull/push strategies model to Heineken to confidently
forecast and plan its inventory levels, ensure a stable supply of materials to maintain
uninterrupted production processes and can be more responsive to customer demand,
reduce excess inventory costs, and streamline its operations for maximum efficiency.
This approach helps the company maintain a competitive edge in the highly dynamic and
competitive beer industry while also aligning with modern sustainability goals.

Strategic Location and Distribution Planning: Heineken strategically plans the

positioning and distribution of products within the supply chain. Decisions regarding
strategic storage locations, distribution structures, and transportation systems are made to
ensure efficiency and effectiveness.

Appropriate Technology Application: Heineken selects technology platforms

such as Magento Commerce and AWS(Amazon Web Services) to support their supply
chain processes. This emphasizes the role of technology in enhancing efficiency and
flexibility within the supply chain.

Optimizing Order Placement Systems: In deploying the Corporate D2C system,

Heineken focuses on optimizing the order placement process. The company may utilize

27
Magento Order Management to efficiently manage orders from business customers,
ensuring accuracy and rapid response times.

Planning for Unexpected Situations: Heineken goes beyond basic planning by

establishing preventative measures and responses to unexpected situations. Strengthening
flexibility within the supply chain enables the company to face and swiftly respond to
unforeseen fluctuations.

2. Heineken meticulously planned the optimization of each stage in their

supply chain
a. Supply

Demand Analysis: Heineken initiates a thorough analysis of market demand,

especially during significant events such as year-end holidays. This includes a detailed
evaluation of consumer trends and forecasting sudden increases in demand to prepare for
these events.

Supplier Management: Establishing and maintaining strong relationships with

suppliers to ensure a stable and high-quality supply by implementing Supplier
Relationship Management (SRM).

b. Manufacturing

Production Planning: Heineken determines the production schedule based on

demand predictions and various factors like raw materials, machinery capacity, and
workforce. Additionally, Heineken utilizes the Enterprise Resource Planning (ERP)
system to plan production, synchronizing processes from order placement to actual
manufacturing.

Quality Management: Ensuring high quality throughout the production process

and applying quality control standards. Implementing a Quality Management System to
ensure that all products meet quality standards.

28
 c. Warehouse

Optimizing Warehouse Management: Heineken focuses on optimizing

warehouse management to minimize storage costs and ensure products are always ready
for distribution by integrating intelligent warehouse management systems such as
Warehouse Management System (WMS).

Technology Utilization: Applying intelligent warehouse management systems

and RFID technology (Radio-Frequency Identification) to track and enhance performance
and accuracy.

d. Distribution:

Transportation Planning: Heineken defines distribution strategies, including

transportation schedules and delivery vehicles. Utilizing a Transportation Management
System (TMS) to plan and monitor the transportation of goods from the factory to
distribution points.

Partnering with Transport Providers: Collaborating closely with transportation

partners to ensure safe, efficient, and timely deliveries.

e. Retailers:

Building Strategic Partnerships: Heineken develops relationships with retailers

to ensure effective product display and sales. Utilizing Customer Relationship
Management (CRM) to track and manage relationships with key retailers.

Promotion and Marketing: Planning to reach the end consumer group by

deploying promotion and marketing strategies to enhance awareness and demand from
consumers. Additionally, applying strategic promotion and marketing management
software to monitor campaign performance and enhance customer interaction.

29
Step 3 - Execution

After having meticulously devised a comprehensive plan, Heineken proceeded to

implement its supply chain management methodology through one of specific strategies.
However, we suggest that Push/pull/ push-pull Strategy is one of the better strategies to
operate its business most efficiently.

Figure 7: Heineken push and pull strategy in supply chain model.

30
a. Heineken’s Push strategy

Figure 8: Heineken Supply Chain Process – Push Strategy

Heineken's product, being a staple in the grocery category, exhibits relatively low
demand uncertainty. Consequently, Heineken can confidently forecast and plan its
inventory levels, ensuring a stable supply of materials to maintain uninterrupted
production processes.

The push strategy can be applied to the initial stages of their supply chain because
uncertainty in the push portion of the supply chain is relatively small, Service level is not
an issue, so the focus can be on cost minimization, which helps Heineken utilize
resources better such as production and distribution capacities while minimizing
inventory, transportation, and production costs.

31
 This may encompass the production of barley and hops, the primary ingredients
for brewing beer. Heineken can maintain inventories of these materials (corks, bottles,
barrels, labels,...) and execute beer production according to a schedule based on long-
term forecast planning. These stages operate based on forecasts rather than actual
customer demand. Establish a business process that describes the beer production process
and pack. These two processes form the company's core business.

Therefore, before Heineken procedure the raw materials and brews the beer, then
the packaging the beer from the brewing process and the ingredients, Heineken starts by
accurately forecasting demand for its beer products:

i. Demand Forecasting (Sales & Operations Planning) the department that

determines the amount of beer to brew and pack batches for production in a week(such
as based on historical data). This helps in planning production and packaging schedules
efficiently.

ii. Planning departments: Based on the demand forecasts, Heineken can plan its
production schedules in advance. This means producing a certain quantity of beer based
on long-term forecasts rather than waiting for specific orders. This helps in reducing
setup time and streamlining production.

iii. Production plans: can be split or consolidated to reduce setup time, switch and
optimize production. This blueprint includes process orders for the brewery and for
packaging. Different production strategies will be applied here. On the one hand, the
brewhouse, packaging, beer light and filtration are activated by a push process.

After Heineken calculates the required production levels to meet market demand
based on long-term demand forecasting and procedure the raw materials, they initiate
large-scale production in accordance with the predetermined plan. Heineken benefits
from substantial economies of scale due to its extensive global beer production. This
substantial scale of production results in a reduction in the average production cost per
unit. The adoption of a push strategy is especially advantageous in this scenario, as it

32
capitalizes on the advantages of this scale, facilitating efficient mass production and
inventory management. Heineken has effectively implemented the push strategy in the
following scenarios:

i. Inventory Control in the United States: Heineken Zoeterwoude, as previously

mentioned, manages inventory for the U.S. market. They make transportation decisions
to the U.S. based on U.S. inventory levels. This approach aids inventory management,
enhances supply chain integration, and guarantees product availability in the U.S. market.

ii. Reducing Order Cycle Times: In the U.S. market, Heineken has successfully
employed collaborative forecasting and related technology to shrink order cycle times
from 12 weeks to 4 or 5 weeks. This improvement has heightened customer
responsiveness, minimized lead times, and ensured the freshness of products.

iii. At Heineken, distributors enter forecasting recommendations and

replenishment orders into their own subpages within the planning system, known as
HOPS (Heineken Operations Planning System), onto the total planned time in stages for
additional orders. Distributors may make changes to the plan as local conditions change.
These changes are available in real-time at the Heineken brewery in Europe, which can
then adjust production and delivery schedules to correspond to actual demand

iv. Heineken applies the push portion of the supply chain before the beer product
reaches the final packaging stage (outbound warehouse). The process starts after the beer
is bottled, and the next step is getting it to distributors. The quantity of beer sent out
depends on how much each customer wants. This part of the process can be either
“pushed” (based on the brewery's production schedule) or “pulled” (based on customer
orders). Not all beer is bottled right away. Some breweries, like Heineken Zoeterwoude
in the Netherlands, manage their inventory strategically. They oversee the stock for
specific markets, like the US. Depending on the level of beer inventory in the US, they
adjust the shipments to meet demand. This is known as “Buy into Warehouse” and it
serves to maintain control over the US inventory.

33
b. Heineken’s Pull strategy:

Figure 9: Heineken Supply Chain Process – Pull Strategy

By implementing a pull supply chain model, Heineken can be more responsive to

customer demand, reduce excess inventory costs, and streamline its operations for
maximum efficiency. This approach helps the company maintain a competitive edge in
the highly dynamic and competitive beer industry while also aligning with modern
sustainability goals.

Heineken's production and distribution process is applied with many modern and
highly automated technologies, but before the customized production process can take
place, all order processing must be done manually with approval.

When there is an order, the planning department at Heineken Zoeterwoude,

following the SCOR model, will consider two different policies for three different large
customers. First, “make-to-stock” for the Dutch and American markets. And second,

34
“make to order” (pull policy). This policy is made for customers who order customized
products and for small quantities. When a batch is started production, a new process order
is created and when a batch is finished, the process order ends.

Heineken's use of a pull supply chain mode in distribution allows it to be more

responsive to customer demand, reduce waste and overstock, and maintain a customer-
centric focus. By aligning its distribution processes with actual demand, Heineken aims
to enhance its competitiveness and ensure that its products reach consumers in the most
efficient and timely manner.

Today, the market demand is more and more volatile, consumers are gradually
following the trend of a more modern, balanced, and practical lifestyle. They tend to
choose and consume green drinks that are not harmful to health. Thanks to the agility and
understanding of customer psychology as well as market changes, Heineken has launched
a new product line Heineken 0.0 with 0.0% alcohol content. Alcohol-free and low-
alcohol beer products have only appeared in recent years but have quickly gained a
foothold in the market, especially in European countries, where consumers are
increasingly conscious of healthy eating. strong. In 2019, Heineken recorded a 7.7%
increase in beer consumption, the highest increase in a decade thanks to the large
contribution of Heineken 0.0 beer. The success of Heineken 0.0 beer is a great
encouragement to Heineken as this product was only launched in 2016. Currently, despite
the decline in total beer consumption, the non-alcoholic beer segment alone is still
growing rapidly. globally. However, there are still some customer segments not interested
in non-alcoholic beer because it has lost its original beer taste, especially the sweetness of
beer. Because of that, Heineken does not offer a wide range of its products like other
products but is only provided by order of dealers.

c. Heineken’s Push-Pull strategy:

Heineken has gained many achievements, especially in boosting its income, by

applying both push and pull supply chain strategies.

35
 Heineken is the second-largest alcoholic drinks company in Vietnam, with a
32.8% market share, according to Euromonitor International 2019. It trails behind Saigon
Alcohol Beer & Beverages. This shows that Heineken is a favorite beer brand among
Vietnamese consumers.

Implementing sound supply strategies has proven instrumental in Heineken's

series of achievements, notably bolstering its revenue: Despite the formidable challenges
posed by the Covid-19 pandemic since the outset of 2020, the revenue of Heineken
Vietnam Beer and Beverage Co., Ltd (Heineken Trading), the entity tasked with
distributing beer and beverage products, not only remained resilient but experienced a
slight uptick, surpassing 55,700 billion VND.

Step 4 - Control

Analysis of Implementation by Heineken:

Performance Metrics Tracking: Heineken likely implemented advanced tracking

systems and software to monitor key performance metrics throughout their supply chain.
This includes real-time visibility into order fulfillment, delivery times, and other relevant
metrics.

Inventory Monitoring: Control mechanisms are likely in place to monitor inventory

levels effectively. Automated systems, such as Warehouse Management Systems (WMS),
may be utilized to track stock levels, manage replenishment, and ensure optimal
inventory turnover.

Quality Standards Adherence: To maintain product quality, Heineken may have

implemented control mechanisms at various stages of the supply chain. This could
include quality control checks during manufacturing, adherence to transportation and
storage conditions, and monitoring of product conditions during distribution.

Procedures for Exceptions and Deviations: Heineken likely established clear

procedures for handling exceptions and deviations in the supply chain. This could involve

36
automated alerts for anomalies in performance metrics, triggering rapid response
protocols to address issues promptly.

Continuous Evaluation and Adjustment: Continuous improvement is a cornerstone of

effective supply chain management. Heineken may regularly evaluate performance data,
seeking areas for enhancement. Adjustments to processes, technologies, or partnerships
could be made to optimize overall supply chain performance.

Technology Integration: Heineken may have integrated advanced technologies such as

Internet of Things (IoT) devices, RFID (Radio-Frequency Identification), and data
analytics to enable real-time monitoring and control across the supply chain.

Collaboration with Partners: Effective control also involves collaboration with

suppliers, distributors, and other partners. Heineken likely maintains open
communication channels, sharing relevant data and insights to collectively address
challenges and improve the overall supply chain.

Risk Management: Control mechanisms would likely include risk management

strategies. This could involve scenario planning, developing contingency plans for
potential disruptions, and ensuring resilience in the face of unexpected events.

It's important to recognize that the specifics of Heineken's implementation would require access to prop

Step 5 - Monitoring

In the monitoring phase, Heineken utilizes key performance indicators (KPIs) to

assess the efficiency of the supply chain.

Return on Equity (ROE)

Net income 3535

ROE = = =
Average Shareholder Equity 17356
20.36% 37
 ROE of Heineken is higher than the average rate of Food and beverage industry with
12.03%

Heineken’s ability to use capital from shareholders effectively.

Return on Assets (ROA)

Earning after interest Net income +[Interest expense∗(1−Tax rate)] 3535

ROA = = = = 0.061 =
Average total assets Average total assets 9758+ 48850
6.1%

Heineken Company has total assets of 58428 million Euro. Every year, the Heineken
company generates a profit after tax of 3535 million Euro. At this time the ROA ratio is
6.1%. That means 1 dong of assets, Heineken company generates 0.061 Euro of profit
after tax.

38
Accounts payable turnover (APT)

Cost of goods sold 11361

APT = = =
Account payable 4631
2.44

39
With APT=2.44, Heineken can pay off effectively its supplier expense and other short-
term debt.

Account receivable turnover (ART)

Sale revenue 21941

ART = = =
Account receivable 3351
6.55

The ART ratio shows that in 2021, account receivables must be rotated 6.55 times.
This means on average about 360 (days) / 6.55 = 55.73 days for the company to collect
the debt. Help make an assessment on the ability to collect debts of Heineken or the
effectiveness of credit granting at Heineken company at the present time.

Inventory turnover (INVT)

Cost of goods sold 1136

INVT = = = 4.64
Inventories 2438
For the food and beverage industry, INVT is relatively important as this item will
become obsolete inventory. Therefore, with INVT =4.64, Heineken is selling goods very
quickly and the demand for Heineken products is very large. In addition, it also shows
Heineken's ability to effectively manage inventory.

Property, plant, and equipment turnover (PPET)

Sales revenue 21941

PPET = = =
PP∧E 12401
1.77

40
 High turnover indicates that assets are being used efficiently and large amounts of
revenue are generated using a small number of assets. That means with a million Euro
investment, Heineken can get 1.77 million Euro in revenue.

Cash to cash (C2C) cycle

C2C = -Week payable × ( APT1 ) + Week in inventory × ( INVT

1
) + Week receivable ×
( ART1 )
= 365 × ( APT1 ) + 365 × ( INVT
1
) + 365 × ( ART1 )
= 365 × (
2.44 )
+ 365 × (
6.55 )
+ 365 × (
4.64 )
1 1 1

= 283.98

It takes more than 283 days for Heineken to pay the Accounts Payable to the
supplier. However, Heineken takes a long time to get paid by customers – about 79 days
on average. Goods stay in Heineken's warehouse for quite some time – nearly 54 days on
average.

41
PART 5: SCM - WAREHOUSE PROBLEM IDENTIFICATION

1. Warehouse process flow

Figure 10: Heineken Warehouse management process flow

a. Inbound
Supplier: Warehouse receives products from Heineken’s factory.
Goods Received Note: Upon the arrival of the goods, a goods received note
(GRN) is created. This document includes information such as the supplier's details, the
quantity of goods received, and any relevant purchase order numbers.
Goods Received: The goods are physically received by the warehouse team at
Heineken. They verify the quantity of goods delivered against the information provided
in the GRN.
Scanning: The received goods are then scanned using barcode or RFID
technology. This step helps in tracking and inventory management.
Inspect Quality: The warehouse team inspects the quality of the received goods.
They ensure that the products meet the required standards and are in acceptable
condition.
Putaway: After quality inspection, the goods are stored in the appropriate storage
locations within the warehouse. This process is known as putaway, where the items are

42
allocated their designated spots based on factors like product characteristics, sales
velocity, and temperature requirements.
Warehouse: Once the putaway is completed, the goods are considered to be in the
warehouse. They are now available to be included in the inventory and used for customer
orders or further processing.
Overall, Heineken's inbound warehouse process involves receiving goods,
verifying their quantity, scanning them for tracking purposes, inspecting their quality, and
finally storing them in the appropriate location within the warehouse for future use.
b. Outbound
Heineken's outbound warehouse process involves several steps:
Warehouse: This is where the products are stored and managed. The outbound
process begins from the warehouse.
Pick: In this step, specific products are chosen and picked from the warehouse
based on customer orders or other requirements.
Scan: The pickled products are then scanned using barcode or RFID technology.
This scanning process helps in tracking the movement of the products and maintaining
accuracy in inventory management.
Quality Inspection: After scanning, the pickled products undergo a quality
inspection. This step ensures that the products meet the company's quality standards and
are in perfect condition for delivery to the customer.
Invoice: Once the quality inspection is complete, an invoice is generated for the
specific customer order. The invoice includes details such as the quantity, price, and any
additional charges.
Customer: Finally, the product is packaged, ready for delivery, and dispatched to
the customer. The customer receives the product based on the order and pays the invoice
amount.

43
 2. Heineken’s warehouse management system problem statement

Despite implementing various strategies such as integrated Intelligent Warehouse

Management Systems to optimizing warehouse operations, through on-site surveys,
utilizing planning documents, process flow analysis, and objective evaluations from
Heineken, it has been identified that the company still facing particularly in terms of
warehouse cost and the expansion and enhancement of its warehousing operations.
In essence, the challenge lies in the potential ripple effect on the company's
financial performance. High warehouse costs and soaring raw material expenses result in
an elevated cost structure for the finished product. In a competitive market like the beer
industry, where consumer choices are influenced by factors like price, quality, and brand
reputation, an increase in the cost of the final product may adversely impact Heineken's
competitive advantage.
The majority of managers suggested the following areas were most inefficient:
- Inventory control (53 per cent)
- Picking (47 per cent)
- Putaway and replenishment (45 per cent)

Figure 11: The warehouse manager’s challenges

In Heineken, Numerous modifications are occurring in the warehouse, which are

improving procedures on a variety of levels. Heineken is seeking avenues for expansion

44
and enhancing the effectiveness of its warehousing operations. Flowing to technology
advancements that frequently result in the development of new storage solutions,
warehouse performance may be continually enhanced. It's true that fresh inventions and
trends are driving a continuous evolution in the warehouse sector. For every company,
maintaining a competitive edge is imperative. In truth, businesses that maintain their
competitiveness also pledge to satisfy customers and prioritize expansion.

Figure 12: Management Warehouse system problem

45
PART 6: IMPROVEMENT SCM - WAREHOUSE FOR COMPANY

1. Improvement suggestion

Firstly, the assessment of Heineken's Key Performance Indicator (KPI) choices.

Since KPIs represent the foundation of performance, they are examined first. It is crucial
for businesses to employ trustworthy KPIs in order to assess their success. First, the KPIs
that the business utilizes to gauge. A list and explanation of the various warehousing
processes' performances will be provided. As a result, a review of the literature will be
done to find KPIs pertaining to warehouse performance. This will serve as the theoretical
foundation for future standards. Benchmarking allows you to assess the quality of a
chosen Heineken product based on KPIs while also learning about the business tactics of
other organizations.

The benchmarks' findings will display the parallels and discrepancies between the
criteria and Heineken's KPIs. As of right moment, By using SAP software in the
management process, it is feasible to provide Heineken with some guidance on how to
enhance warehouse management procedures in order to save expenses, improve
convenience, and improve customer satisfaction and the advantages when they applying
warehouse management based on using SAP EWM, SAP ERP, and SAP PI platforms.

Secondly, the performance of the procedures and ways to make them better. The
relevant information will be obtained from Heineken's database and the literature for each
of the ensuing points. First, the internal Heineken warehouse procedures that need the
greatest labor will be investigated. This will indicate the procedures that the techniques
ought to cover. Next, We'll publish and explain the breakthroughs and trends for the
labor-intensive processes that will provide a preliminary idea of the possible future
actions for Heineken's warehouses.

Thirdly, how well the various solutions fit with the procedures of the business. To
do this, an analysis of their suitability for the business's procedures will be conducted. To
get insight into the set of criteria used to evaluate it, a literature search will be conducted

46
on technologies. Following that, the tendencies discovered in the project's second portion
will be assessed using the earlier discovered. The results of this evaluation will lead to the
selection of one or more methods that will enhance the efficiency of the warehouse
operations of the chosen firm.

2. Improvement by performance measurement theory

The performance metrics for Heineken are the Key Performance Indicators (KPIs)
that Heineken employs to assess the effectiveness of its warehouses and which are
detailed in the Logistics KPIs Manual. The Logistics KPIs Manual consists of a
collection of KPIs that are linked to the Green Diamond and are essential, as well as
optional Process Performance Indicators (PPIs) & Alerts. By combining the four key
drivers of the company growth, profitability, capital efficiency, and sustainability and
responsibility it symbolizes the company's aspirations. Logistics KPIs track the
effectiveness of transportation, warehousing operations, or both together. Because the
emphasis in this case is on measuring warehouse operations, only the KPIs that are
related to warehouse performance, that is, to the overall performance of the warehouse
and transportation have been examined. All indicators, the Logistics KPIs Manual is the
source of all the indicators included in this section.

2.1. Essential Performance Measures

Businesses use key performance indicators (KPIs) to track their advancement toward a
certain objective. They serve as a foundation for decisions on operational and strategic
enhancement. The fundamental measurements are required KPIs that showcase an
operating company's (OpCo) site's performance. Every nation where Heineken is sold an
organization that possesses warehouses is called an OpCo, and each warehouse inside
this OpCo is called a site. They are required as they enable worldwide deployment and
guarantee adherence to internal and external reporting requirements.

47
Of the seven KPIs stated warehouse performance, the combined performance of the
warehouse and the transportation. Every KPI falls under one of the Green Diamond's
driving categories.This section's particular information was purposefully withheld and
kept confidential. At Heineken, warehouse performance is essential, and finding new
ways to improve it is a daily research topic. The “winning theory” of Heineken, the
Green Diamond, which represents the company’s objectives and ambitions, frames this
research. The four pillars of this theory are: Growth, Capital efficiency, Sustainability
and responsibility

2.2. Alerts and Indicators of Process Performance

Unlike KPIs, PPIs and Alerts are optional, hence providing their data is not
required. PPIs are operational accomplishment targets that provide information about
more detailed data that is centered on individual procedures. Any divergence from the
desired improvement targets is brought to light through alerts. Both of them are utilized
while working on improvements in particular business sectors and depending on
company goals. PPIs and Alerts are divided, like KPIs, among the four sections of the
Green Diamond. This section's particular information was purposefully withheld and kept
confidential.

48
 Financial Productivity Utilization Quality Cycle time

Receiving Receiving cost Receipts per man-hour % Dock door utilization % Receipts processed Receipt processing time
accurately per receipts

Putaway Putaway cost Putaway per man- % Utilization of % Perfect put-aways Putaways cycle time
per line hour putaway labor and (per putaway)
equipment

Storage Storage space Inventory per square % Locations and % Locations without % Inventory days on
cost per item foot occupied inventory discrepancies hand

Order picking Picking cost Order lines picked per % Utilization of picking % Perfect picking lines Order picking cycle
per order line man-hour labor and equipment time (per order)

Shipping Shipping cost Orders prepared for % Utilization of shipping % Perfect shipments Warehouse order cycle
per customer shipment per man- docks time
order hour
Table 1: Warehouse Key Performance Indicators
In general, the three main KPIs to take into account when starting with the financial category are labor expenses,
inventory costs, and shipping costs. In addition, three KPIs stand out in terms of productivity and usage: picking
productivity, receiving productivity, and inventory space use.

Next, five KPIs for the quality category stand out a little bit: Product damage rate, perfect order, accurate order
delivery, on-time delivery, and accurate storage. In conclusion, when it comes to the time category, the following five KPIs

49
 are nearly indistinguishable from one another: order lead time, reception
processing time, warehouse order cycle time, order picking time, and put-away time. In
general, it may be concluded that the price, output, and making use of warehouses are
essential to enhancing performance. These three areas allude to the Heineken Green
Diamond's profitability section, where a number of predefined measures are in place. A
visual depiction of every KPI category that has been addressed can be found in Tables 2,
3, 4, and 5.

KPIs 14 12 15 16 17 Total

Labor ✔ ✔ 2

Inventory ✔ ✔ 2

Transport ✔ 1

Insurance ✔ 1

Receiving ✔ 1

Put away ✔ 1

Storage ✔ 1

Picking ✔ 1

Shipping ✔ ✔ 2

Order Processing ✔ 1

Cost as % of Sales ✔ 1

Maintenance ✔ 1
Table 2: Cost KPIs

50
 KPIs 14 12 15 16 17 Total

Lateness ✔ 1

Response to urgent delivery ✔ 1

Layout configuration ✔ 1

Implementation of 5S activities ✔ 1

Receiving productivity ✔ ✔ ✔ ✔ 4

Put away productivity ✔ ✔ ✔ 3

Inventory space utilization ✔ ✔ ✔ ✔ 4

Picking productivity ✔ ✔ ✔ ✔ 4

Order prepared for shipment ✔ 1

Labor productivity ✔ ✔ ✔ 3

Throughput ✔ ✔ ✔ 3

Shipping productivity ✔ ✔ ✔ 3

Transportation utilization ✔ ✔ 2

Warehouse utilization ✔ ✔ ✔ 3

Turnover ✔ ✔ ✔ 3

Outbound/staging area utilization ✔ ✔ 3

Equipment utilization ✔ 1

Transport productivity ✔ 1
Table 3: Productivity and Utilization KPIs

51
 2.3. Evaluation of the KPIs for Heneiken
The Heineken's warehouse's efficiency, evaluation of Heineken's required KPIs
aims to provide a picture of the company's performance and efficiency measurement
methods, as well as their primary differences from those reported in other case studies
and the literature. Since required KPIs are the ones that must be reported, while PPIs are
optional, the focus is on mandatory KPIs.

Beginning Heineken's KPI definition lists seven warehouse-related KPIs that are
required. While this figure may appear low, there are seven more warehouse KPIs that
are noted when compared to the data that was obtained from Danone. To remain
manageable and pertinent, the number of KPIs may be condensed. This is due to the
possibility of discouragement if there are an excessive number of required KPIs to be
completed each month (or at the frequency stated). This can have a negative impact on
accurate performance reporting and therefore lessen their dependability. Thus, Heineken
employs the appropriate amount of KPIs approach and obliquely helps with KPI fill-in.

The KPIs used by Heineken to measure the performance of their warehouse align
with the literature and case studies referenced in this thesis. Table 7 demonstrates that
Heineken has implemented KPIs across the four categories identified in the literature.
Comparatively, the number of KPIs in Heineken's mandatory list is considered average
when compared to Danone. Both companies also prioritize safety in the working
environment. However, a discrepancy is observed in Heineken's focus on quality within
their logistics KPIs. Unlike the other case studies, Heineken only dedicates one
mandatory KPI to quality. In contrast, literature and case studies emphasize the
importance of KPIs such as Product shipped damage free, On-time shipment, and
Accuracy order delivery in measuring operational quality at various levels. Product
shipped damage free indicates the quality of operations and alerts to excessive product
damage. On-time shipment measures supply chain performance and punctuality in order
shipping. Accuracy order delivery reflects the number of error-free orders.

52
 The performance of Heineken's processes by incorporating warehousing trends
and innovations. The research focuses on analyzing KPI trends to improve the selection
of KPIs at Heineken, shedding light on areas of the process that are currently overlooked.
This presents an opportunity to identify weaknesses in the process and subsequently
enhance its performance. The findings indicate that other companies employ multiple
KPIs to measure quality from various perspectives, which is supported by the literature.
In contrast, Heineken only utilizes one quality KPI. It is recommended that Heineken
consider incorporating additional quality KPIs to assess process performance from
different angles, potentially identifying weaknesses and ultimately improving overall
performance.

Figure 13: Warehouse activities as a percentage of total cost

53
 Cost Productivity & Utilization Quality Time

Heineken*
Literature

Labor cost ✔

Inventory cost ✔

Shipping cost ✔

Receiving productivity ✔

Inventory space utilization ✔

Picking productivity ✔

Product damage rate ✔

On-time delivery ✔

Accuracy in order delivery ✔

Perfect orders ✔

Storage accuracy ✔

54
Order lead time ✔

Reception processing time ✔

WH order cycle time ✔

Put away time ✔

Order picking time ✔

WERC

Average Warehouse Capacity Used ✔

Order-picking accuracy (Percent by Order) ✔

On-time Shipments ✔

On-time Ready to Ship ✔

Peak Warehouse Capacity Used ✔

Dock-to-Stock Cycle time, in Hours ✔

Percent of Supplier Orders Received Damage Free ✔

Percent of Oders with On-time Delivery ✔

55
Order Fill Rate ✔

Shipped Damaged Free (Outbound) ✔

Fill Rate Line ✔

Shipped Complete per Customer Order ✔

DANONE*
Table 4: KPIs per category

56
 3. Improvement by SAP platform

The key function of SAP EWM (Extended Warehouse Management) impact to the
Heineken’s warehouse activities

The SAP EWM offers a range of key functions that when applying SAP EWM to
Heineken, it offers a range of key functions that can greatly enhance warehouse
management processes.

Firstly, SAP EWM enables full automation of internal, incoming, outgoing, and
support processes for various types of storage facilities such as distribution centers,
production warehouses, transit warehouses, and consolidation centers. This automation
streamlines operations, reduces errors, and improves overall efficiency.

Secondly, SAP EWM provides built-in optimization functions for cyclic loading,
stocking, slotting, and packaging. These functions help optimize warehouse resources
and personnel management, increasing performance and efficiency. Additionally, SAP
EWM allows for time tracking and monitoring of various characteristics such as weight,
volume, quantity, and distance for each operation, providing valuable insights for
analysis and decision-making. The system also supports the maintenance of time and
cost/price tariffs, enabling the calculation of prices for 3PL customers and wages for
warehouse personnel. Moreover, SAP EWM supports pick-by-voice technology,
enhancing the accuracy and speed of order picking processes. It also offers full
automation of warehousing operations' calculation and assignment of tasks to RF
terminals, further streamlining operations.

Lastly, SAP EWM seamlessly integrates with a multitude of automated

warehousing equipment, ensuring smooth communication and coordination between the
system and the equipment. Overall, SAP EWM provides Heineken with a comprehensive
solution to optimize warehouse operations, improve efficiency, and enhance overall
performance.

57
PART 6: CONCLUSION - Hoàng

In conclusion, we try our best to conduct this report which content the evaluation of

Heineken in SCM system. It is clear that Heineken's supply chain management (SCM)

system is a complex and sophisticated operation that has both strengths and weaknesses.

On the one hand, Heineken's SCM system is highly efficient and effective, and it has

helped the company to achieve significant cost savings and improve its customer

satisfaction. On the other hand, Heineken's SCM system is also complex and expensive,

and it can be difficult to manage. Additionally, we have identified pros and cons of this

systems by conducting the interview with the Heineken’s staff, analysing these.

Therefore, we have provided recommendations for Heineken’s warehouse management

to improve the process in efficiency and effectiveness way.

REFERENCE - Quang

1. https://www.investopedia.com/terms/s/scm.asp#:~:text=The%20five%20most

%20critical%20phases,costs%20and%20avoiding%20supply%20shortages.

2. https://www.argentus.com/what-exactly-is-supply-chain-management-10-

different-definitions/

3. https://novardis.com/en/project/heineken/

4. http://dspace.vnbrims.org:13000/jspui/bitstream/123456789/4567/1/

Warehouse%20Management%20A%20Complete%20Guide%20to

%20Improving%20Efficiency%20and%20Minimizing%20Costs%20in

%20the%20Modern%20Warehouse.pdf

5. https://essay.utwente.nl/96629/1/BSc_BMSAussaresse_publishable.pdf

58
6. OUR STRATEGIES - listed company.

https://heineken.listedcompany.com/newsroom/Heineken_AR_2018_pg20-

51.pdf.

7. 8. HEINEKEN (Heineken N.V. and its affiliated companies1 2.

https://www.heinekenireland.ie/sustainability/our-focus-areas/heineken-

supplier-code-v0-2.pdf.

8. 11. Assessment of Supply Chain risks and risk mitigation practices: the ....

http://etd.aau.edu.et/bitstream/handle/123456789/24137/Yeshiwas

%20Agazhu.pdf

9. 13. Top Supply Chain Risks and How to Mitigate Them - NetSuite.

https://www.netsuite.com/portal/resource/articles/inventory-management/

supply-chain-risks.shtml.

10. HEINEKEN Global Supply Chain | World Economic Forum.

https://www.weforum.org/organizations/heineken-global-supply-chain/.

11. HEINEKEN’s Magne Setnes: Resiliency, Risk ... - Management Events.

https://managementevents.com/news/heineken-magne-setnes-resiliency-risk-

csco/.

12.

59