HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY

SCHOOL OF INDUSTRIAL MANAGEMENT



MANAGEMENT INFORMATION SYSTEMS

GROUP PROJECT

MIS IN SUPPLY CHAIN MANAGEMENT

SYSTEM OF HEINEKEN

Lecturer: Assoc. Prof. Pham Quoc Trung

CLASS CC02 --- GROUP 07 --- HK 231
Student name Student ID Contribution
Tran Nhat Quang 2053364 100%
Pham Ngoc Thao Ngan 2053259 100%
Cao Van Hoang 2053007 100%
Do Pham Hoang Phuc 2053335 100%

Ho Chi Minh City, November, 2023

Management Information Systems – Assoc. Prof. Pham Quoc Trung

 TABLE OF CONTENTS
I. INTRODUCTION ................................................................................................... 1
1. The Heineken Company ..................................................................................... 1
2. Management Information Systems (MIS) of Heineken ....................................... 3
II. LITERATURE REVIEW.................................................................................... 4
1. Definition Supply Chain Management ................................................................ 4
2. How Supply Chain Management Works ............................................................. 5
3. What is Warehouse management ? ................................................................... 10
4. What is the SAP EWM platform? ..................................................................... 12
III. METHODOLOGY ............................................................................................ 13
1. Data collection method ..................................................................................... 13
2. Primary data ..................................................................................................... 13
3. Secondary data ................................................................................................. 19
IV. MIS IMPLEMENTATION IN HEINEKEN'S SUPPLY CHAIN
MANAGEMENT ......................................................................................................... 20
1. Design .............................................................................................................. 20
2. Planning ........................................................................................................... 24
3. Execution ......................................................................................................... 28
4. Control ............................................................................................................. 35
5. Monitoring ....................................................................................................... 36
V. SCM - WAREHOUSE PROBLEM IDENTIFICATION ................................ 41
1. Warehouse process flow ................................................................................... 41
2. Heineken’s warehouse management system problem statement ........................ 43
VI. IMPROVEMENT SCM - WAREHOUSE FOR COMPANY ......................... 46
1. Improvement suggestion ................................................................................... 46
2. Improvement by performance measurement theory .......................................... 47
3. Improvement by SAP platform ......................................................................... 55
VII. CONCLUSION ............................................................................................... 57
VIII. REFERENCES ............................................................................................... 58

Management Information Systems – Assoc. Prof. Pham Quoc Trung

 TABLE OF FIGURES

Figure 1. Heineken Logo ....................................................................................... 1

Figure 2. The Products of Heineken ...................................................................... 1

Figure 3. Key Supply Chain Management Processes............................................. 7

Figure 4. 5 Pillars .................................................................................................. 9

Figure 5. KPIs of Supply Chain ...........................................................................10

Figure 6. Heineken Supply Chain Model .............................................................22

Figure 7. Heineken push and pull strategy in supply chain model ........................28

Figure 8. Heineken Supply Chain Process – Push Strategy ..................................29

Figure 9. Heineken Supply Chain Process – Pull Strategy....................................32

Figure 10. Heineken Warehouse management process flow .................................41

Figure 11. The warehouse manager’s challenges..................................................44

Figure 12. Management Warehouse system problem ...........................................45

Figure 13. Warehouse activities as a percentage of total cost ...............................53

Management Information Systems – Assoc. Prof. Pham Quoc Trung

 LIST OF TABLES

Table 1. Warehouse Key Performance Indicators ......................................................... 49

Table 2. Cost KPIs ........................................................................................................ 50

Table 3. Productivity and Utilization KPIs .................................................................... 51

Table 4. KPIs per category ............................................................................................ 55

Management Information Systems – Assoc. Prof. Pham Quoc Trung

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.

Management Information Systems – Assoc. Prof. Pham Quoc Trung

ABSTRACT

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 an evaluation to improve the SCM system of Heineken.

Management Information Systems – Assoc. Prof. Pham Quoc Trung

 I. INTRODUCTION

1. The Heineken Company

Figure 1. Heineken Logo

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 II. 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.
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Management Information Systems – Assoc. Prof. Pham Quoc Trung
Regularly analyze data to identify trends and areas for optimization, and implement continuous

improvement initiatives.

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.

2.1. 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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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 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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
supply chain management process, preventing persistent issues and improving overall customer

satisfaction.

2.2. 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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 2.3. What makes an excellent supply chain?

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 Figure 4. 5 Pillars

2.4. What are the main KPIs of a supply chain?

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.

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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

3. What is Warehouse management ?

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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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, 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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:

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.

The last one is reduced returns and lower reclamation costs.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 III. 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

First of all, in order to complete this study in the most specific way, I will define research objectives

as the objectives should be shown clearly to ensure that the study can be focused and relevant.

Secondly, I will collect relevant data through interviews and existing documents to supplement

and strengthen my research model and hypotheses. After collecting enough data, I use appropriate

statistical methods to analyze the data and have a detailed insight of the relationship between

employee motivation and job performance. Finally, analyzed data will be synthesized and the

conclusion will be drawn based on the findings.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 N.O Questionnaires Answers

1 Is there any important Technology plays a pivotal role in our supply chain

information or insights management. We employ advanced data analytics, demand

about Heineken's supply forecasting models, and inventory management tools to

chain that you think would optimize production, reduce waste, and ensure the

be important to know? availability of our products. This technological integration

enables us to achieve greater efficiency and responsiveness

in meeting consumer demands.

2 How often does the Conducting regular inventory checks and audits is crucial

warehouse go through for several reasons. Firstly, it helps us maintain accurate

inventory checks and records of our stock levels, ensuring that we always have

audits? 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 carefully

organized to ensure planned layout that maximizes space utilization and

efficient storage and streamlines operations. We employ a combination of

retrieval of products? manual and automated processes to ensure efficiency.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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 With this problem, we must learn with relevant

optimize warehouse departments to make the most accurate forecasts and

management to minimize supply plans possible using advanced technologies and

storage waste and increase supply planning methods to predict market demand. In

supply efficiency? 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 5 Can you tell us about any Firstly, we have implemented advanced technology and

recent innovations or automation systems to streamline our warehouse

improvements made to the processes. This includes the adoption of state-of-the-art

warehouse operations? 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.

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 We establish KPIs to evaluate supply chain performance

monitor and evaluate on key criteria such as inventory transit times, order

supply chain performance? accuracy and responsiveness. Measuring and tracking

these metrics period helps us detect and resolve problems

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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 long-

strategy? How to reduce term relationships with suppliers and diversifying our

risks from dependence on a supply is inevitable. This helps us ensure a stable supply

single source of supply? and quality of raw materials before entering the production

stage.

8 How does Heineken Our products are packaged and canned carefully. During

maintain product quality transportation to ensure the temperature is always at a

during transportation and suitable level without affecting the quality of the beer.

storage? 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 We always have emergency plans and quick recovery to

and rapid recovery when deal with supply chain incidents such as delivery delays,

there is an incident in the environmental impacts or technical difficulties. We

supply chain? establish planning processes to ensure emergency

measures are implemented and supply operations can

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 recover quickly. We must assess the possible risks,

resulting from developing a response plan, training the

emergency response team to create effective

communication systems and coordinating with relevant

partners.

10 How does Heineken At Heineken Vietnam, we hope through our production

integrate sustainability into and business activities to create motivation for positive

its supply chain changes. With significant contributions to the local

management? 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 IV. MIS IMPLEMENTATION IN HEINEKEN'S SUPPLY CHAIN

MANAGEMENT

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.

1.1. 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.

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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 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.
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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

1.2. 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.

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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 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
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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

2. Planning

2.1. Planning for the entire supply chain

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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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 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.

2.2. Heineken meticulously planned the optimization of each stage in their supply

chain

2.2.1. 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
Supplier Management: Establishing and maintaining strong relationships with suppliers to

ensure a stable and high-quality supply by implementing Supplier Relationship Management

(SRM).

2.2.2. 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.

2.2.3. 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.

2.2.4. 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
Partnering with Transport Providers: Collaborating closely with transportation partners to

ensure safe, efficient, and timely deliveries.

2.2.5. 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 3.1. 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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:

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.

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.

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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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 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:

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.

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.

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

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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

3.2. Heineken’s Pull strategy:

Figure 9. Heineken Supply Chain Process – Pull Strategy

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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, “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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

3.3. Heineken’s Push-Pull strategy:

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

and pull supply chain strategies.

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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 proprietary and up-to-date information. The beverage industry, in general, places a high value

on supply chain efficiency, given the perishable nature of many products and the need for timely

deliveries to meet consumer demand.

5. Monitoring

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

efficiency of the supply chain.

5.1. Return on Equity (ROE):

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 5.2. Return on Assets (ROA):

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 38
Management Information Systems – Assoc. Prof. Pham Quoc Trung
 5.3. Accounts payable turnover (APT):

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

5.4. Account receivable turnover (ART):

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.

5.5. Inventory turnover (INVT):

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

5.6. Property, plant, and equipment turnover (PPET):

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.

5.7. Cash to cash (C2C) cycle:

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 V. SCM - WAREHOUSE PROBLEM IDENTIFICATION

1. Warehouse process flow

Figure 10. Heineken Warehouse management process flow

1.1. 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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 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.

1.2. 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

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:

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
  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 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 Figure 12. Management Warehouse system problem

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 VI. 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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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 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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 Financial Productivity Utilization Quality Cycle time

Receiving Receiving Receipts per % Dock door % Receipts Receipt

cost man-hour utilization processed processing
accurately time per
receipts

Putaway Putaway Putaway per % Utilization % Perfect put- Putaways

cost per line man-hour of putaway aways cycle time
labor and (per putaway)
equipment

Storage Storage Inventory per % Locations % Locations % Inventory

space cost square foot and occupied without days on hand
per item inventory
discrepancies

Order Picking Order lines % Utilization % Perfect Order

picking cost per picked per of picking picking lines picking cycle
order line man-hour labor and time (per
equipment order)

Shipping Shipping Orders % Utilization % Perfect Warehouse

cost per prepared for of shipping shipments order cycle
customer shipment per docks time
order man-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 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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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

KPIs 14 12 15 16 17 Total

Lateness ✔ 1

Response to urgent delivery ✔ 1

Layout configuration ✔ 1

Implementation of 5S activities ✔ 1

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 Cost Productivity & Quality Time
Utilization

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 ✔

Order lead time ✔

Reception processing time ✔

WH order cycle time ✔

Put away time ✔

Order picking time ✔

WERC

Average Warehouse Capacity ✔

Used

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 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

Order Fill Rate ✔

Shipped Damaged Free ✔

(Outbound)

Fill Rate Line ✔

Shipped Complete per ✔

Customer Order

DANONE*
Table 4. KPIs per category

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 VII. CONCLUSION

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.

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Management Information Systems – Assoc. Prof. Pham Quoc Trung
 VIII. REFERENCES

1. Jason Fernando (October 20, 2023). Supply Chain Management (SCM): How It Works &

Why It's Important. Retrieved November 28, 2023 from

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

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

2. Argentus (August 2, 2018). What Exactly is Supply Chain Management? 10 Different

Definitions. Retrieved November 28, 2023 from https://www.argentus.com/what-exactly-

is-supply-chain-management-10-different-definitions/

3. Novardis. Heineken. Retrieved November 28, 2023 from

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

4. Gwyne Richards. Warehouse Management 2nd Edition. Retrieved November 28, 2023 from

http://dspace.vnbrims.org:13000/jspui/bitstream/123456789/4567/1/Warehouse%20Mana

gement%20A%20Complete%20Guide%20to%20Improving%20Efficiency%20and%20

Minimizing%20Costs%20in%20the%20Modern%20Warehouse.pdf

5. S.B.E. Aussaresse (August 2, 2023). Warehousing trends and innovations: best practice.

Retrieved November 28, 2023 from

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

6. HEINEKEN MALAYSIA BERHAD Annual Report 2018. OUR STRATEGIES. Retrieved

November 28, 2023 from

https://heineken.listedcompany.com/newsroom/Heineken_AR_2018_pg20-51.pdf

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 7. Global Supply Chain (July 8, 2010). Heineken. Retrieved November 28, 2023 from

https://www.heinekenireland.ie/sustainability/our-focus-areas/heineken-supplier-code-v0-

2.pdf

8. Yeshiwas Agazhu (Jan, 2020). Assessment of Supply Chain risks and risk mitigation

practices: the case of Heineken brewery Kilinto site. Retrieved November 28, 2023 from

http://etd.aau.edu.et/bitstream/handle/123456789/24137/Yeshiwas%20Agazhu.pdf

9. Ian McCue (November 3, 2023). Top Supply Chain Risks and How to Mitigate Them.

Retrieved November 28, 2023 from

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

risks.shtml

10. WOLRD ECONOMIC FORUM. HEINEKEN Global Supply Chain. Retrieved November

28, 2023 from https://www.weforum.org/organizations/heineken-global-supply-chain/

11. Management Events (January 20, 2022). HEINEKEN’S MAGNE SETNES: RESILIENCY,

RISK MANAGEMENT, AND “THE SWISS ARMY KNIFE” CSCO. Retrieved November

28, 2023 from https://managementevents.com/news/heineken-magne-setnes-resiliency-

risk-csco/

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