MKT203 - Assignment 2 ( group Assignment)

Member:

Dinh Nguyen Hong Thien Phuc E1700835

Tran Hoang My Linh E1800130

Ho Thanh Toan E1700779

Vu Nhat Linh E1700796

Le Phu An E1700783

Table of Content

Content:

I. Executive summary

II. Introduction of Each Organization and their warehousing system

II.1. Traphaco Joint Stock Company overlook

II.2. L’usine cafe and Restaurant overlook

III. Comparison Between two different kind of organization

IV. The problem of Each organization with warehouse system

V. Conclusion

VI. Reference
 I. Executive summary

Warehousing which is a part of every business from manufacturing to retail, regardless of size of
business, a warehouse system is critical needed for a business operation. A warehousing system is a
factor that keep the flow of goods going smoothly, with the goods traceability, the organization would
be able to know the status of their inventory which would help them in considering to purchase more
or not. On the other hands, a good warehousing system would be a strong element for the financial
department and Operation Department to keep track that would the production system is efficient.
 Therefore, in this case, our writing would report two different kind of business to point out the
important of warehouse and currently comparing the different of warehouse system that they
applied. Accordingly, to have the best overlook in this case, we would like to focus on two particular
organization, firstly the Traphaco joint stock company, A medical manufacturing in Vietnam, which
has been in business for 46 years and considered as the greatest medical supply in Vietnam. And
second organization is the L’usine Cafe and Restaurant, an organization in hospitality, which also
could be known as a goods retailer and service supply in Vietnam.

II. Introduction of Each Organization and their warehousing system

II.1. Traphaco Joint Stock Company overlook

Traphaco is a leading medical brand in Vietnam market, their product are Eastern Traditional
Medicine, in detail, they mostly use the herbal material in manufacturing medicine. In term of
business, so far, they have one distribution subsidiary , 28 representative branch, over 64 Provinces
across the country.

As a leading in medical supply in market, and medicine manufacturing company, A sufficient

standard in warehousing system is needed for organization. In order to keep the business running
efficiently, Traphaco has applied a multiple warehousing system includes Manufacturing warehouse
which would storage the raw material for medicine-producing activity. And another warehouse on the
purpose of product-storaging .

The chain in product-manufacturing of Traphaco is quite complicated, They built up a factory in

Sapa, Lao Cai, a 4Ha factory to preliminary processing of input herbs and grow testing medicinal
plants. After processing raw input material, they would Transfer those to a main manufacturing
factory in Hung Yen to proceed the accomplished medicine-producing. And after that, the Medicine
would be transferred to 2 main distributing warehouse in Ho Chi Minh city and Hanoi.

On the other words, Traphaco has built up 6 different warehouse in order to support the
manufacturing and distributing process. in detail, Traphaco has to build up a Raw input material
warehouse in Sapa to contain the raw herbs before the preliminary processing and after these they
have to transfer it to a contained warehouse before delivering to the manufacturing factory. In Hung
Yen Province, they also have a warehouse to storage the input material for producing process, and
moving along with that, they also build a warehouse to contain accomplished product and packaged
system before carrying it to distributing warehouse in Ho Chi Minh city and Hanoi.

The reason Traphaco has to applied a multiple warehousing system is because that Sapa is a
place with rich source of raw material for the company, Particularly herbs. Traphaco built an material
processing factory there in order to minimize the cost of delivery and maximize the amount of raw
material in the manufacturing warehouse. In explanation, a ton of raw material after preliminary
process would give out only 600-800kg of manufacture-usable material, therefore they place a factory
in Sapa to minimize the wasted cost.

Secondly, the reason for them to place a manufacturing factory and product warehouse in Hung
Yen is because that, the route from Sapa to distribution warehouse in Hanoi and Ho Chi Minh is rough,
which would increase the risk in transferring. Therefore, they place a factory and warehouse in Hung
Yen to reduce the cost of delivery. Moreover, Hung Yen province is near Hanoi only about 2 hours of
driving and the route to Ho Chi Minh city is easier than Sapa.

And Finally the reason they place their two main distribution warehouse in Hanoi and Ho Chi
Minh city is that, these cities are two of the biggest city across the country, with the higher demand
 than other place, and the route from these two city to other place is easier and more convenient to
the company.

In term of warehouse operation for manufacturing, the strictly goods flow management is critical
needed, company have to know the status of Inventory In their warehouse, Warehouse is not just a
place to storage, it is a indispensable place that would help the business run in efficiency. Therefore,
the warehouse has it standard in management system, in this case, Traphaco is a medical product
supply, thus, the standard is more strict not only because of the sufficient flow of goods but also the
quality of product. Traphaco has product traceability for all their product, with lot, serial number and
batch control. They also use the barcoding and RF barcoding scanning system to support the tracking.
On the aspect of quality control, Traphaco applied a temperature control system, which would put the
product in the best status of preservation. And finally, a disaster recovery plan for all facilities is
proposed in term of keeping the business efficient in any circumstances.

II.2. L’usine cafe and restaurant overlook

In the hospitality industry and particularly the restaurant business, the need for a warehouse
system is needed. L’usine is a cafe and restaurant with the Western style, their store mainly located in
District 1 of Ho Chi Minh city. In the whole look of business system, they have a bar in responsibility of
beverage and a kitchen in charge of Food. Therefore, they need a warehouse would contain the
material for all the cooking process and drink serving.

In term of hospitality business, a warehousing system used is the private warehouse, which means
that, on the aspect of Restaurant design, they would leave 2 rooms for the material which would
belong to Bar and Kitchen. On the other words, the size for a warehouse is not required to be
extremely large. Because the material for kitchen and bar can not be preserved for long time, it is
required to be fresh and new, the raw ingredient would be purchase and moved in after 3 to 5 days.
Therefore , the warehouse would be design with multistage to maximize the storage-productivity. And
specially, the kitchen warehouse would be divided in to 3 different room, one for dried ingredient,
another for fresh material and a cold room for preservation. Because the input of restaurant is served
and consumed immediately, therefore a place to storage the input is not needed.

On the aspect of management, They could not directly use the barcoding or barcoding scanning
system, then a frequent tracking and recording by a warehouse officer is performed. With the
inventory management, the warehouse staff has the responsibility to keep track on the amount of
material to make sure that none of the ingredient is lack of when it is needed. Moreover, the expiration
day of each material is controlled to guarantee the quality of the input with none of mistake.

Moreover, because of the western restaurant, in the warehouse of Beverage, they have a room
for wine preservation, with the room temperature control, to keep all the wine in the best status to
ensure that none of the wine is stale in serving.

In general, a private warehouse is sufficient for the hospitality business, they include their
warehouse in the restaurant design in order to reduce the cost of warehousing, and they also can use
the material right immediately needed. That is on the aspect of restaurant business and the whole
hospitality industry.

III. Comparison Between two different kind of organization

Firstly, the size of warehouse applied in those business, on the aspect of Traphaco a medical
manufacturing company, with the large amount of material and the great stream of distribution,
almost across the country. The warehouse which could fulfill the need is required to be large to
contained a sufficient amount of product for manufacturing and to deliver to retailer or direct to
customer. Comparing to restaurant business, particularly L’usine restaurant, with the factor of
instantaneous and low amount of preservation product, a private with medium size of warehouse is
sufficient, which also help them to reduce the cost of warehouse rent.

In term of location, a manufacturing company, Traphaco, has more process in a business chain
from manufacturing to customer, therefore, they need a large amount of warehouse located at many
place with different purpose, for instance, two warehouses in Lao Cai for preliminary process of input,
where the most of input as herbs are collected. Two more warehouses in Hung Yen with out put
manufacturing process, and they also need two more warehouses in big city, Hanoi and Ho Chi Minh,
for distribution purpose where the demand is high and the route to other provinces is more convenient.
Comparing to restaurant business, The warehouse is located right in the place of restaurant, because a
restaurant is only being served for a particular area, the stream is not as large as a manufacturing
company.

On the aspect of cost occur, a manufacturing business has to deal with a greater cost of
warehouse rent, with the multiple warehouse system, the fixed cost for warehouse rent is higher. The
cost is not only just rent but they are also the cost for facility operation such as, electronic and worker
wage. The annual increment of warehouse rent is a problem for Traphaco, because the rental price
could legally increase 10 percent a year. About the restaurant business, because the warehouse is
located right in the restaurant, then they don’t have to worry about the cost of rent. Moreover,
because of the size of warehouse is not large, the cost for contribution electronic is lower. About the
Warehouse staffs, a manufacturing company such as Traphaco has to pay a large amount of money for
the warehouse activity, particulary inventory and packed. But the responsible for the warehouse
activity in restaurant business could easily be performed by any supervisor or captain of restaurant,
which help them swipe out that kind of cost.

IV. The problem of Each organization with warehouse system

in term of manufacturing company, particularly the Traphaco in this case, The first problem in
my point of view is that the location of factory on purpose of manufacturing. Trophaco chose to build
the manufacturing factory in Hung Yen, which is quite bias the North, which means that they are
facing a higher cost of transporting the product from the factory to the South and relates province.
Moreover, they only have two representative branch across the country, which means that the
product from the factory have to be delivered to the main warehouse before distributing to other
place in order to keep tracking the flow of product in the North and South area, which occur a wasted
cost when the product have to be transported back to the Middle area. On the other words, Traphaco
put a strong trust on their distribution stream, they consider that they have a great amount of retailer,
and those retailer would cause a problem in their product control.

In my point of view, in order to solve this problem, The solution to move the manufacturing to
the middle area is not possible, because of the extreme high cost of transferring the whole factory
from Hung Yen to middle area, therefore, I think that they should establish another representative
branch and main warehouse in the middle area. On the other words, they could easily control the
flow of product in each area, and they also can reduce the cost of delivering the product back to the
middle area to distribute to retailer. Another reason why they should establish another
representative branch in the middle area is because they could control the waste in product flow,
which might appear in the transporting process from the south to the middle. On other aspect, they
need a strict controlling on their product flow, which might help them minimize the waste of product.
 On the aspect of restaurant, particularly, the L’usine restaurant, because all the process of
tracking product is proceed by humanity effort, which means that the productivity is not extremely
high, the time-consuming is quite considerable, and the mistake-occurring in the process might
appear, which would leave a flaw in the system. Because of the small size of business, they disregard
of the importance of Warehouse system. Moreover, the lack of traceability is a common problem in
this industry, the ability to track the food ingredient through all stage is a demand in the hospitality
industry, this might create a blindspots in the supply chain and generate the indispensable risk, and it
also can be a weakness to the brand reputation, which can occur a reduce in sale and profit. One
critical reason for this blindspots is that the warehousing staff only collect the data from the recipe of
supplier. Moreover, the failure in control the inventory in warehouse could be a reason of
cost-increasing. Therefore, the Hospitality industry should put the effort to fix these flaws, for
instance, with the traceability, Restaurant could apply the Blockchain system, a direct and clear
communication between supplier and restaurant, a digital platform, this could fix the problem of
missing recipe. One of the advantage of blockchain is that the data in the blockchain once it is added
in the system, it is permanent and can not be adjusted, which would help organization to improve the
traceable ability. Furthermore, with the inventory management, there are many kind of inventory
management software which would give the warehousing manager a real-time visibility to inventory,
so that the inventory data would be accurate. With these Technology and concern, restaurant could
be more efficient on controlling the wasted cost of operation and also increase the sales and profit of
organization.

V. Conclusion

The warehousing system is a critical factor that would help the organization to be more efficient
in controlling their product cost. But the facility of warehouse such as the size, technology applied,
location of warehouse would be place regard to the particular factor of each type of business. For
instance, a manufacturing business my need a large size of warehouse with high-tech facility because
of the demand of high traceable ability and great amount of product and material. The characteristic
of business also impact on the location of warehouse, for example, a manufacturing company might
want to build a warehouse near the place of input ingredient compared to hospitality, where the
private warehouse is installed right in the restaurant or hotel. And it is obvious that, the cost for
warehousing of manufacturing company is higher than other business, because the demand of
multiple warehouse with different purpose, they facing a larger cost than other type of business. And
finally, the common thing of warehousing system in every industry that they should be manage
strictly, because an efficient inventory control would be a tool to reduce the cost of output.