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Exploring Supply Chain

for Rupchanda Soyabean


Oil
A
Flagship band of
Bangladesh Edible Oil
Limited

Term Paper on
Supply Chain Management (MKT 418)
Section: 01
Topic: Exploring Supply Chain for Rupchanda Soyabean Oil

Submitted To: Saadia Shabnam


Assistant Professor
Department Of Business Administration
Submitted By:
Student Name

Id

Ranjoy Kumar Roy

2009-2-13-064

Arindam Kumar Biswas

2009-2-10-274

Md. Rabiul Islam

2009-2-10-248

Mahmuda Haque Sharna

2009-2-10-219

Md. Saroar Alam

2009-2-10-230

Date of Submission: 13th December, 2013

Letter of Transmittal
December 13, 2013
Saadia Shabnam
Assistant Professor
Department of Business Administration
East West University
Plot-A/2, Jahurul Islam City,
Aftab Nagar, Dhaka-1212
Subject: Submission of term paper on Exploring Supply Chain for
Rupchanda Soyabean Oil
Dear Madam,

We are very pleased to submit this term paper on Exploring Supply Chain
for Rupchanda Soyabean oil which is done according to the given
instruction.

We are honored to prepare this term paper under your guidance since it gave
us the opportunity to know the overall process of supply chain management.

We tried our level best to accumulate the information for you as


comprehensively as possible. We will be obliged to provide further
clarification on this report whenever necessary.

Sincerely yours,
Ranjoy Kumar Roy
________________
Arindam Kumar Biswas
________________
Mahmuda Haque Sharna
________________

[2009-2-13-064]
[2009-2-10-274]
[2009-2-10-219]

Md. Rabiul Islam


________________

[2009-2-10-248]

Md. Saroar Alam


________________

[2009-2-10-230]

Acknowledgement

First of all we want to thank the Almighty Allah for our sound health so that
we could complete the term paper within the due date. We would like to
thank our honorable course instructor Saadia Shabnam, Assistant Professor,
East West University; who helped us through her sound guidance. With her

inexhaustible guidance, valuable advice, continuous inspiration, constructive


criticism and generosity she helped us to carry out this report successfully.
We would like to give special thanks to Mr. Ahsan Habib for sharing the
information related to our study.

Finally, we would like to thank all our group members and friends those who
directly or indirectly helped us to provide and accumulate all the necessary
information for the accomplishment of this term paper.

Executive Summary

Supply Chain Management is a holistic approach to the collection, processing of raw


materials and delivering the final products to the customers. To ensure the success of this
holistic approach the allignment between supply chain strategy and given competitive
strategy is necessary.
Rupchanda Soyabean Oil, a product of Bangladesh Edible Oil Limited has established
strategic allignment between supply chain strategy and given competitive strategy for it by
introducing pouch pack. Through the introduction of pouch pack customer responsiveness has
been given priority which can better serve the demand of price conscious consumers at the same
time the transportation cost has been reduced because increased density of product make it
possible to better utilize the given transportation space. So, customer responsiveness and
efficient transportation seem to be moving in the same direction for Rupchanda soyabean oil.
Brazil, Argentina, Indonesia, Malaysia are four major potential

crude oil suppliers for

Rupchanda soyabean oil. The ability of providing the quality raw material at right amount and in
the right time are the criteria upon which the final supplier country/ countries are selected.
Excess demand of Rupchanda soyabean oil has made the company to cope with pull based
demand. BEOL also pushing the market demand by introducing different promotional activities.
Global database management software SAP is been used at BEOL for ensuring efficiency of the
central warehouse. The ability to make order keeping minimum six days of stock at hand is the
prime criterion to be selected as the distributor for Rupchanda soyabean oil. Most importantly,
efficient supply chain management has made Rupchanda soyabean oil to generate 95 percent of
the total sales of BEOL.

TABLE OF CONTENTS

PART A: INTRODUCTORY POINTS.........................................................................7


1.0 ORIGINS........................................................................................................................... 7
1.1 OBJECTIVES....................................................................................................................... 7
1.2 SCOPE.............................................................................................................................. 7
1.3 LIMITATIONS....................................................................................................................... 8
1.4 METHODOLOGY.................................................................................................................. 8
2.0 COMPANY INTRODUCTION:.................................................................................................... 9
2.1 CHOSEN PRODUCT INFORMATION:.......................................................................................... 9
2.3 BASIC SUPPLY CHAIN STRATEGY...........................................................................................10
Corporate Strategy:........................................................................................................ 10
Logistics Strategy:.......................................................................................................... 11
2.4 STRATEGIC FIT BETWEEN THE STRATEGIES..............................................................................12
PART B: PHYSICAL SUPPLY CHANNEL.................................................................13
3.0 DETERMINING SUPPLY REQUIREMENTS:..................................................................................13
3.1 PLACING ORDERS:............................................................................................................ 13
3.2 INBOUND LOGISTICS ACTIVITIES & PARTIES:...........................................................................14
3.3SUPPLY
3.4MODE

OF

OF

RAW MATERIALS:................................................................................................ 15

TRANSPORTATION:................................................................................................15

3.5 TERM & CONDITIONS:....................................................................................................... 16


3.6 VENDOR SELECTION:......................................................................................................... 16
PART C: PHYSICAL DISTRIBUTION CHANNEL.......................................................17
4.0 FORECASTING

OF

MARKET DEMAND:....................................................................................17

4.1 FORECASTING

FACTS OF

RUPCHANDA SOYABEAN

OIL:...............................................................18

4.2 ORDER PROCESSING......................................................................................................... 19


4.3 INVENTORY MANAGEMENT:.................................................................................................20
4.4 WAREHOUSING:................................................................................................................ 20

4.5 OUTBOUND LOGISTICS

OF

PRODUCTS / TRANSPORTATION:.........................................................21

4.6 VENDOR PERFORMANCE APPRAISAL:.....................................................................................21


4.7 APPLICATION

OF

80-20 PRINCIPLE.......................................................................................22

PART D: THE REVERSE LOGISTICS CHANNEL.......................................................23


5.0 CONCLUSION:.................................................................................................................. 23
6.0 REFERENCES:................................................................................................................... 24

PART A: INTRODUCTORY POINTS

1.0 Origins
This term paper is prepared to give an idea about the overall Supply Chain
Management of a selected product ( Rupchanda Soyabean Oil)

of

Bangladesh Edible Oil Ltd (BEOL). The preparation and submission of this
term paper is supplementary requirement of Supply Chain Management (MKT
418) course.

1.1 Objectives
By doing the report, we will be able to know the inbound and outbound
logistical activities of Rupchanda Soyabean oil. Some major objectives
include

Identify strategic moves of the given product in the context of

supply chain.
Identify physical supply channel of the given product.
Identify psychical distribution channel of the given product.
Identify reverse logistics channel of the given product.

1.2 Scope
The report is prepared concentrating on supply chain of Rupchanda
Soyabean oil. Other areas of marketing like branding, marketing research will
not be the subject of this report and therefore can be the issues of future
research. It is a comprehensive report based on peoples opinion, our
perception and knowledge, and books of Business Logistics/Supply Chain
Management.

1.3 Limitations
While preparing the report we had to face some problems.
1. For the sake of official secrecy, the concerned officials could not
provide enough information.
2. Time shortage was one of the major problems.

1.4 Methodology
Nature of the study: Exploratory
Source of information: Both primary and secondary.

Primary Source: Primary data were collected form Territory Manager,


Ahasan Habib
of Bangladesh Edible oil Ltd,

Secondary Sources: Secondary information was collected from the


internet and newspapers.

Presentation of Information: Collected and calculated information are


presented in graphical

forms.

2.0 Company Introduction:


Consumers inspire us to continue creating some of the healthiest edible oils
to keep millions of families healthy and happy. We are known as Bangladesh
Edible Oil Limited (BEOL)

Bangladesh Edible Oil Limited (BEOL), the only 100% foreign owned
joint venture in edible oil industries in Bangladesh was established in 1993
and has since been aggressive in the marketing of consumer pack edible oil
under the well known household brands like Rupchanda, Meizan, King's, etc
in Bangladesh. BEOL is the first company to introduce packing of edible oil in
PET bottles, pouch pack and also the first to launch a sachet pack in mustard
oil in Bangladesh. According to AC Nielsen report, Rupchanda ranks number
1 in terms of the most preferred brand in the soybean oil consumer pack
category. BEOL does not participate in selling of edible oil in loose form.

2.1 Chosen Product Information:

Rupchanda, the flagship brand of Bangladesh Edible Oil Ltd. ( BEOL),


entered the unorganized Soyabean Oil market of Bangladesh in 1996 and
since then, it has scaled unprecedented heights through continuous

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innovation and uncompromising quality control. True to the brand essence of


"Happy Family Moments", Rupchanda's single minded vision has helped it
emerge as the undisputed market leader in the edible oil category in the
country.

2.3 Basic Supply Chain Strategy


Supply

Chain

Strategy

is

the

process

whereby

guidelines/plans

are

formulated for positioning the firm to meet its objectives. Supply Chain
Strategy joins together two very important strategies namely Corporate and
Logistics strategy.
Corporate Strategy:
o Customers are important consideration for BEOL. For this
reason BEOL has offered cholesterol free Rupchanda soyabean oil
enriched with omega 3, 6 components and vitamin A. This
vitamin A has been incorporated with Rupchanda oil by the help
of UNESCO.

o Suppliers

are

given

opportunity

to

convey

the

product

( Rupchanda soyabean oil) in different size and shapes. This


convenience has added value to the different market segments
according to the corresponding demand of the product.

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o Market competition has been given priority from the point of


time the competitors started coming into the bottled soyabean
oil market in 2000. From that point, A heavy onslaught of
aggressive

marketing

and

advertising

activities

helped

in

building the brand 'Rupchanda' in the consumer mind space and


consolidates its position as the market leader in the soyabean oil
category.

Logistics Strategy:

Bangladesh Edible

oil

Ltd has

successfully

reduced

the

variable cost by introducing the pouch pack of Rupchanda


Soyabean oil. When oil is transported by using pouch pack
instead of bottle then larger amount of oil can be moved given
the same portion of transport space. Thus, this strategic change
has given the company opportunity to lower the price of the
product.

Bangladesh Edible oil Ltd has reduced the capital investment


by not setting up any divisional warehouse. In this case oil is
shifted directly to the district wise distributer from the factory.

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Bangladesh Edible oil Ltd has improved the service through


mixing Vitamin A with Rupchanda Soyabean oil. Rupchanda is
not charging any additional price to the customer since it is a
social project with UNICEF.

2.4 Strategic Fit between the strategies


Strategic fit suggests about a blending of strategies where a company
will focus in both responsiveness towards customers and efficiency
towards
case

the

reduction

of

of

Bangladesh

cost.
Edible

In
Oil

Ltd, customer

responsiveness

given

priority

by

introducing

pouch

pack soyabean

oil

which

can

better

serve

demand

of

price

the

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has

conscious consumers at the same time the transportation cost has


been reduced because increased density of product make it possible to
better utilize the given transportation space.

PART B: PHYSICAL SUPPLY CHANNEL

3.0 Determining Supply Requirements:

The determining factors of supply chain requirements by Bangladesh Edible


Oil Ltd are discussed below:

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The factors include the necessity to have right material at right amount
and in the right time. Along with these three important factors, transport
mode selection and information exchange with suppliers play vital role in
the whole supply process.

3.1 Placing Orders:


Company places the order to get raw materials for continuing present
production and securing future production. So, Bangladesh Edible oil Ltd
places the orders upon analyzing:

The level of warehouse inventory, availability of products in the


pipeline, and finally receiving schedule of the pipeline products for
maintaining a minimum stock level.
Probable yearly, quarterly and monthly production schedule.

3.2 Inbound Logistics Activities & Parties:

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In case of Bangladesh Edible Oil Ltd, the inbound logistic part is simple.
Basically three parties are involved, the company itself, suppliers and the
suppliers supplier. The supplier collects the solid soyabean from the farmers
and turns into crude oil

then this crude oil is shifted to the factory of

Bangladesh Edible Oil Ltd at Narayangong, Dhaka.

3.3Supply of Raw Materials:

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Raw material of Rupchanda soyabean

which is crude oil is not

mainly produced in Bangladesh. Means insignificant amount of

crude oil come from native sources.


So, the raw material is collected from outside Bangaldesh.
Brazil, Argentina, Indonesia, Malaysia are the major sources for
crude oil for Bangladesh.

3.4Mode of Transportation:
For transporting crude oil BEOL only use water ways. Imported raw
crude oil is transported through two phases. At first crude oil enters
into Chittagong port then small lighter ships are used to take the oil to
the factory in Narayan gong. Means multimodal transportations like air
way and road way are absent here. Water way transportation gives the
company an option of less possible cost to incur.

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P h a s e to w n oe ( C h i t a g o n g po r t t o f a c t o r y )
3.5 Term & Conditions:

Pre specified lead time is to be maintained strictly by the supplier of


crude

oil

otherwise suppliers may be faced with

penalty as

documented earlier.
Crude oil has to be handed over to the company at the Chittagong port
and before that all the liability regarding the oil will have to be borne
by the suppliers.
The quality assurance team will examine the incoming oil under
specific standard. If the incoming crude oil does not fulfill the level of
standard then the full shipment will be taken back to the exporting
country according to the agreement.

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3.6 Vendor Selection:

For vendor selection BEOL has specified a set of criteria for Rupchanda
soyabean oil. There are four major available crude oil supplying countries
including Brazil, Argentina, Indonesia, and Malaysia. Now, the criteria will be
followed to determine who will be the ultimate supplier/suppliers.

Vendor should be able to supply specific amount of crude oil.

Lead time should be maintained carefully and efficiently.

Most importantly the quality of the crude oil will have to be up to the
standard. The reason BEOL does not have any soft corner for low
quality crude oil and will reject the shipment if proven low standard.

The offered price for crude oil will have to be competitive given the
international standard.

After scrutinizing the criteria safely the supplier/suppliers are selected


eventually for Rupchanda soyabean oil.

PART C: PHYSICAL DISTRIBUTION CHANNEL

4.0 Forecasting of Market Demand:

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Demand forecasting is the activity of estimating the quantity of a product


or service that consumers will purchase. Demand forecasting involves
techniques including both informal methods, such as educated guesses, and
quantitative methods, such as the use of historical sales data or current data
from test markets.

In this case, BEOL follows time series analysis to forecast current and future
demand of Rupchanda soyabean oil based on data of past years. From 1996
the data has shown upward trend making it easier for BEOL to take
production decision.

4.1 Forecasting facts of Rupchanda Soyabean oil:


Gradual improvement in demand in recent past years in spite of
increasing amount of competition has made BEOL to plan for the
increase in production from 200 tons to 400 tons of soyabean oil per
day by the next year.

Since Rpuchanda Soyabean oil is dealing with excess demand so BEOL


is mainly concerned of pull based demand.

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Active consumer engagement began in 2005 at a mass scale with the


organization of a chain of cooking contests which weaved in the vital
elements of 'taste enhancement' along with 'health in every drop' and
'uncompromising quality' in the brand imagery of Rupchanda. 'Monitor
Chef of the Year' (2005), Agora's 'Rupchanda Cooking Competition'
(2005) and Rupchanda's 'Potato Recipe Contest' were some popular
programs. Consumer engagement reached a peak in 2009 with
'Rupchanda Food Carnival' in 6 major districts of Bangladesh .These
program allowed Rupchanda to push the market for generating extra
demand.

So, Rupchanda, despite being the market leader with around 30%
share, maintains healthy aggression in all dimensions of demand
development.

4.2 Order Processing


Order processing is a key element in maintaining healthy supply chain
relationship with customers. Since demand is very high so the company
does not have to go for postponement. Order processing is represented by

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a number of activities like order preparation, order transmittal, order


entry, order filling and order status reporting. The process is discussed

DTeHFaei srctat irdotiobryOryu ffit o cer


Table: Showing the order processing mechanism at Bangladesh
Edible Oil Ltd.

At first distributor receive the order from retailers manually and after that all
the procedures are followed by electronic means. Here, mainly four parties
are involved and they are Distributors, Territory Managers, Head office and

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Factory office. The process has been discussed by the above mentioned
table.

4.3 Inventory Management:

In head office inventories are managed electronically through the help of


database management software SAP. Using database management software
BEOL has managed to maintain actual information about level of stock and
take production decision accordingly.
In the distribution houses inventories are managed manually without the
help of computers. According to the company rule the distributors are asked
to manage the inventory in a way so that minimum stock of 6 days is
maintained. It means distributors are bound to order immediately when are
left with only 6 days of stock.

4.4 Warehousing:
BEOL has only one central factory warehouse at Narayangong but no
divisional warehouse.

District wise warehouses are not company owned

means the distributors warehouses are used to stock the product for
spreading the product around the country. To be eligible to become
distributor for the company, the concerned distributor has to have certain
arrangements and those are:

A warehouse having capacity to accommodate 150-20 tons of oil.

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A manager who will be in charge of the warehouse.


One warehouse keeper with two helpers.
Has to agree to keep the stock for minimum 6 days.

4.5 Outbound Logistics of Products / Transportation:


Outbound logistics for BEOL is very simple. Since there is no postponement
so oil cartons are transported every day across the country in bulk amount.
Some facts regarding the transportation of Rupchanda soyabean oil are
discussed below:

20 percent of total Oil is transported through won transport facility.


80 percent of total Oil is transported through third party transport

facility like sarkar , min transports e.t.c.


Only one mode of transport (Truck) is used for transportation. Small

trucks are used inside Dhaka and large trucks are used outside Dhaka.
Only one route is followed which is road way.

4.6 Vendor Performance Appraisal:


The process of supplier appraisal and short listing involves a number of
steps. It begins with determining which criteria will use to assess potential
vendors. Based on this, the company needs to identify and screen the
vendors that the company wants to apprise, and then collect the information
for this purpose.

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In case of Rpchanda soyabean oil, the main intermediary party between the
BEOL and next link in the supply chain is called distributor. So, distributors
are known to be vendor for BEOL.

BEOL has an appraisal plan for their

distributors.
According to the plan the distributors are given primary target to buy certain
amount of product from the company. If 90 percent of the target is achieved
the distributors will be allowed to purchase the Rupchankda soyabean oil
with 90 paisa less per litter. If 100 percent is achieved then distributors will
be allowed to purchase Rupchanda soyabean oil at 1 taka less per litter. If
115 percent of primary target is achieved then distributors will be allowed to
purchase Rupchanda soyabean oil at 1.25 taka less per litter.

4.7 Application of 80-20 Principle

Bangladesh Edible Oil Ltd has varieties of products like Rupchanda soyabean
oil, Rupchanda mustard oil, Mijan palm oil, Kings sunflower oil. Among them
Rupchanda soyabean oil has got highest sales with above 95 percent of total
profit. So, it can be claimed that Rupchanda soyabean oil falls in the 20
percent category of 80-20 principle known as Paretos low.
Given Strategy:
Since Rupchanda soyabean oil is A graded convenience product so it has
been made available in every district and sub-district of the whole country.
For this reason customer can get this oil from their nearby store.

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PART D: THE REVERSE LOGISTICS CHANNEL

BEOL does not have a conventional backward supply channel for the faulty or
inappropriate logistical products. Means, when any faulty or inappropriate
products come into notice then that products are not taken back to the
factory rather those products are sold out in local market without brand
level.
For example, if a bottle oil or pouch pack is found with leak then the oil is
extracted from the bottle or pouch pack and sold out in open market. At the
same time the looser parties may be retailers or distributors are rewarded
with new fresh packaged oil.

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5.0 Conclusion:

Building strong supply chain is possible when all the concerned supply chain
parties act in a

holistic way towards achieving unified goal. Supply chain

management is an integral part for any company. A firms needs to establish


an effective supply chain in order to gain competitive advantage. In response
to BEOL, it has established a harmony among inbound logistics, operation ,
outbound logistics, marketing, service and eventually this harmony works for
creating a superior competitive position for Rupchanda soyabean oil.

6.0 References:

Ahasan Habib
Territory Magager, Bangladesh Edible Oil Ltd.
Ballou Rona;d H., J 2005, Business Logistics / Supply Chain
Management, 5th Edition, Pearson publication, New Jerscy.

www.superbrands.com/bd/images/PDF/26.pdf
www.beol-bd.com
www.bangladeshdir.com/webs/catalog/bangladesh_edible_oil
_limited__beol_.html

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