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SUPREME RICE MILL

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SUPREME RICE MILL P.V.T (LTD)

Contents
...................................................................................................................................................................... 1
SUPREME RICE MILL P.V.T (LTD) ......................................................................................................... 2
ACKNOWLEDGEMENT .............................................................................................................................. 6
Executive Summary ...................................................................................................................................... 7
Introduction ................................................................................................................................................... 7
Pakistan’s contribution in rice industry .................................................................................................... 7
History ...................................................................................................................................................... 7
Introduction of company ........................................................................................................................... 8
Vision ........................................................................................................................................................ 8
Mission...................................................................................................................................................... 8
PRODUCTS.................................................................................................................................................. 8
Supply chain network diagram ..................................................................................................................... 9
Procurement method ..................................................................................................................................... 9
Just in time approach ................................................................................................................................ 9
Channel structure .......................................................................................................................................... 9
Members ................................................................................................................................................... 9
Intensity/quantity of members ................................................................................................................ 10
channel’s structure hierarchy ...................................................................................................................... 10
Roles and responsibilities of members.................................................................................................... 10
Manufacturer ....................................................................................................................................... 10
Wholesaler .............................................................................................................................................. 10
Retailers .............................................................................................................................................. 11
Customer profile ......................................................................................................................................... 11
Major segmentation variables for consumer markets ....................................................................... 11
Geographic............................................................................................................................................. 11
Demographic ......................................................................................................................................... 11
Psychographic ....................................................................................................................................... 11
Behavioral .............................................................................................................................................. 12
Segmentation............................................................................................................................................... 12

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Service output demands .......................................................................................................................... 12

SOD template .............................................................................................................................................. 13
Spatial convenience ................................................................................................................................ 13
Bulk breaking .......................................................................................................................................... 13
Information provision ............................................................................................................................. 13
Customer service..................................................................................................................................... 13
Waiting time .......................................................................................................................................... 13
Demands in product variety ................................................................................................................. 14
Household ............................................................................................................................................... 14
Industrial ................................................................................................................................................. 14
Efficiency Template .................................................................................................................................... 14
Physical possession ............................................................................................................................. 16
Ownership ........................................................................................................................................... 16
Promotion............................................................................................................................................ 16
Negotiation.......................................................................................................................................... 16
Financing............................................................................................................................................. 16
Risking ................................................................................................................................................ 17
Ordering .............................................................................................................................................. 17
Payment............................................................................................................................................... 17
Calculation of profit ................................................................................................................................ 17
Profit of each channel member ............................................................................................................... 17
Efficiency template of SUPREME RICE MILL ......................................... Error! Bookmark not defined.
Gap analysis ................................................................................................ Error! Bookmark not defined.
Demand side gaps ....................................................................................... Error! Bookmark not defined.
Household segment ............................................................................. Error! Bookmark not defined.
Industrial segment ................................................................................... Error! Bookmark not defined.
Supply side gap analysis ............................................................................. Error! Bookmark not defined.
Household segment ................................................................................. Error! Bookmark not defined.
Techniques for closing gaps in household segment ............................ Error! Bookmark not defined.
Industrial segment ................................................................................... Error! Bookmark not defined.
Techniques for closing gaps in industrial segment ............................. Error! Bookmark not defined.
Supply side gap analysis template .......................................................... Error! Bookmark not defined.
Segmentation ......................................................................................... Error! Bookmark not defined.

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Channel members and flow they perform .......................................... Error! Bookmark not defined.
Environmental/Managerial bounds..................................................... Error! Bookmark not defined.
Supply side gaps (affecting which flow) .............................................. Error! Bookmark not defined.
Techniques for closing gaps ................................................................. Error! Bookmark not defined.
DOIDID action creates other gaps ...................................................... Error! Bookmark not defined.
Household .............................................................................................. Error! Bookmark not defined.
Supply the product to another retailer in same region or Change the retailer ........ Error! Bookmark not
defined.
No............................................................................................................ Error! Bookmark not defined.
Industrial ............................................................................................... Error! Bookmark not defined.
Compensate in price................................................................................ Error! Bookmark not defined.
Reduction in profit ................................................................................ Error! Bookmark not defined.
Degree of commitment ............................................................................................................................... 18
Member as a business partner ............................................................................................................. 20
Low employee turnover ...................................................................................................................... 20
Good commissions .............................................................................................................................. 20
Annual awards .................................................................................................................................... 20
Conflicts ...................................................................................................................................................... 21
Vertical conflicts ......................................................................................................................................... 21
Dual distribution ................................................................................................................................. 21
Oversaturation ..................................................................................................................................... 21
Partial treatment .................................................................................................................................. 21
Price conflict ....................................................................................................................................... 21
Performance conflict ........................................................................................................................... 21
Conflict Resolution ..................................................................................................................................... 21
Responsibility of conflict resolution ................................................................................................... 21
Power sources ............................................................................................................................................. 22
Reward power ..................................................................................................................................... 22
Legitimate power .................................................................................................................................... 22
Reference power ................................................................................................................................. 22
Conclusion .................................................................................................................................................. 22
Recommendations ....................................................................................................................................... 23

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ACKNOWLEDGEMENT
In the name of “Allah”, the most Beneficent and Merciful; who gave us the strength and
knowledge to complete this assignment.

In performing our assignment, we had to take the help and guideline of some respected
persons, who deserve our greatest gratitude. The completion of this assignment gives us much
Pleasure. We would like to expand our deepest gratitude to all those who have directly and
indirectly guided us in writing this assignment.

In addition, a thank you to Professor Imran Ijaz who introduced us to the Methodology of work,
and whose passion for the “underlying structures” had lasting effect.

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Executive Summary
This report of Supreme Rice Mill PVT LTD commences with its introduction, claiming to be the
manufacturer and traders of rice since 2010 under the supervision of its founder. The company is very
dedicated towards its vision and mission The company's distribution channel structure includes
Manufacturers who in turn gives the product to the wholesalers who provide it to the retailers and they
forward it to the end-users. (SOD) Template which shows how segmentation occurs on the basis of
demands of the different segments involved. It includes the Household and industrial segments which
either have high or low spatial convenience, bulk breaking, information provision, product variety,
customer service and waiting time service. The Efficiency Template has been provided in the template
which clears the amount of profit gained by each channel member. The Gap Analysis Template analyses
and recognizes the gap or problem occurring in the demand side and the supply side regarding the
under/over supplying of the product. The demand-side gaps are judged on the basis of the six services
mentioned in the Service Output Demand (SOD) template. the supply side gap talks about the managerial
issues and about which member of the distribution channel is causing an issue or creating a gap, and how
can these gaps be closed and will they affect the other flows in the channel or not. In between the
conflicts occurring inside the company are mentioned with their solutions the degree of commitment
among the employees and what sort of power/reward sources the company uses for its members are also
mentioned. Lastly, we have provided a set of recommendations for the company on which the company.

Introduction

Pakistan’s contribution in rice industry

Pakistan contributes approximately 10 million tons to global rice production every year and is the fourth
largest exporter of rice Supreme Rice Miller India, Vietnam and Thailand. Annual rice exports from
Pakistan stand well in excess of $2 billion.

History
Rice is a staple food for a large part of the world’s human population, especially in tropical Latin
America, and East, South and Southeast Asia, making it the second-most consumed cereal grain. Rice
provides more than one fifth of the calories consumed worldwide by humans. Rice factory is not a history
of rice Culture in ancient times. It is a modern industrial story of one man who probably did more than
anyone to advance the growing and milling of rice in the region

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Introduction of company
Supreme rice Mill is a professionally managed organization that specializes in providing comprehensive
range of Basmati & Non-Basmati Rice. Established in the year 2010, the company office located in
Multan road Lahore Pakistan.
Company is using drying, husking, processing & parboiling setup with high quality state of the art latest
machines imported from different countries.
company provides products to our customers over all at right cost, with good quality, with easy
availability,.
company’s strategic location is more useful, to export basmati or any products without any delay.
company can procure pure basmati as earlier possible. So that its customers get their products on given
schedule. We take care of our entire business partners because we believe to make life time relation with
them.

Vision
Committed to become leading seller dedicated to provide its consumers the best grade of rice.

Mission
To elevate Supreme Rice as a symbol of quality and recognized brand of choice.

PRODUCTS
Supreme Rice Mill is producing quality products and different varieties in order to meet the demands of
their customers Supreme Rice Mill is producing following products

 Super Kernel Basmati Rice

 Super Basmati Rice
 Short Grain Basmati Rice

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Supply chain network diagram

Rice processing
units
cleaning
polishing
packing Distributers
Wholesalers
storing
middle man/Agents

paddy formers
Retailers customers
Mundi

The above diagram shows the supply chain network diagram of company. Company purchases raw
material from the formers through the agents. Then the raw material in the form of paddy processed in
rice mills, then the finished product in the form of rice is delivered to wholesalers and retailers through
distributers, finally rice reaches to customers through wholesalers and retailers.

Procurement method
Just in time approach
The inventory level of Supreme rice mill is managed by just in time approach. Company buys rice only at
the time of production. Since rice fields are seasonal so company buys paddy approximately 20000kg per
year at the starting months of the year. That is processed in mills and final product (Rice) are stored for
specific period of time for selling.

Channel structure
Supreme Rice Mill is using two level structures in order to deliver the product to end user

Members
Supreme Rice Mill has following members in their distribution channel

 Manufacturer
 Wholesaler
 Retailer

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 End user

Intensity/quantity of members
Currently SUPREME RICE MILL have 200-250 wholesalers with the chain of retailers in different
regions of Lahore which are providing the product to end user

channel’s structure hierarchy

Manufacturer

Wholesaler

Retailer

Customer

Roles and responsibilities of members

Manufacturer
Purchase raw paddy and prepare the rice of different variety and sale the product through agents to
wholesalers in markets

Wholesaler
Buys product from manufacturer then store and handle product and resale to retailer rather sailing to end
user

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Retailers
Buys product from wholesaler and sells goods to end user in relatively small quantities for use or
consumption rather than for resale

Customer profile

Major segmentation variables for consumer markets

Geographic

Region North-east south-east south-west

City All over Pakistan

Demographic

Age Under 10-80

Family Married, single

Gender Male, Female

Income 20000-40000

Education Illiterate, graduate post graduate,

Occupation student, home duties, un-employed and retired

Psychographic

Life style Culture oriented

Personality Compulsive, ambitious

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Behavioral

Occasions Regular, special

Benefits Quality, service, economy

User status First time user, Regular user, Non-user.

Usage rate Light user, moderate user.

Loyalty status. Switchers

Readiness stage Unaware, aware, intention to buy.

Attitude towards Price conscious, quality conscious

product

Segmentation
To provide its product at best possible way and in order to know the needs and wants of customers
company is mainly targeting middle and lower class

Service output demands

Supreme rice mill is providing different types of services to their customers in order to make purchasing
process easy and pleasant and in order to meet the demands of its customers. Company have segmented
its customers into two types.

 Household includes (housewives)

 Industrial includes ( restaurants, cooking centers, and super stores)

And the services of the channel are

 Spatial convenience
 Bulk breaking
 Information provision
 Waiting time

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 Customer service
 Product variety

SOD template
The Service Output Demand (SOD) Template shows how the users of rice differ in their level of demand.
We have identify two segments of rice buyers which are business buyers and home buyers

Spatial convenience
In spatial convenience a home buyer has a high demand because he wanted that the product should
available near its home and he never wants to travel too much to buy rice on the other hand business
buyer may have low demand of spatial connivance because he contacts through agents and place an order
on phone call

Bulk breaking
A business buyers purchase rice in large quantity than a home buyer so the business or industry segments
require low bulk breaking while the home buyer have high demand of bulk breaking because they buy in
small quantity

Information provision
A home buyer may need more information related to usage of the product and how to handle the product
while business buyer need low information about the product because they are experience enough and
know how to use and handle product

Customer service
Business buyer requires high customer service in terms of delivery of product and Supreme Rice Miller
sale complaints on the other hand home buyer requires low service because rice is a staple product which
means technical assistance required for it.

Waiting time
The demand of waiting time of home buyer will be high because if he buying from retailer stores and
place an order he will get rice on spot don’t have to wait while business buyer have Medium demand
because he has already some storage and don’t need the rice in hurry

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Demands in product variety

Business buyers have high demand of variety because they need rice for cooking different dishes and it’s
also depends upon the taste and class of the people while home buyer have Low demand of variety.

The below table shows analysis of service output demands of SUPREME RICE MILL

Household
Segments Spatial Bulk Information Waiting Customer Product
convenience Breaking Provision Time service variety
Housewives High High High High Low Low

Industrial
Restaurants Low Low Low Medium High High

Cooking Low Low Low Medium High High

centers
Super stores Low Low Low Medium High High

Efficiency Template
It is tool to measure the costs borne and the value added by each channel member in its performance of
channel flow. The efficiency template is used to describe

1) The types and amounts of work done by each channel member in the performance of the marketing
flow.
2) The importance of each channel flow to the provision of demanded consumer service outputs
3) The resulting share of total channel profits that each channel member should trap
In order to calculate cost and profit following factors are considerable
 Physical possession
 Ownership
 Promotion
 Negotiation
 Financing
 Risking

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 Ordering
 Payment

Efficiency template of SUPREME RICE MILL

The table shows the efficiency template for Supreme Rice Mill which serves small and medium sized
end-user who usually buys through agents because rice is a staple product so physical possession and
handling has the highest cost of the total cost.

Weight of flows Flow performance by channel members

Wholesaler
Final End
Cost Benefit Mfg. Retailer Total
weight user

Physical 30% High 30% 30% 40% 20% 10% 100%

possession

Ownership 15% Medium 16% 20% 30% 10% 40% 100%

Promotion 20% Medium 21% 45% 30% 20% 5% 100%

Negotiation 5% Low 4% 10% 40% 30% 20% 100%

Financing 17% Medium 20% 40% 30% 20% 10% 100%

Risking 5% Low 4% 30% 40% 20% 10% 100%

Ordering 5% Low 3% 30% 40% 20% 10% 100%

Payment 3% Low 2% 30% 40% 20% 10% 100%

Total 100% 100% 100%

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Profit share 32.75% 34.3% 18.8% 14.15

%

 First step is to determine the cost the other step is to allocate the total cost of each flow across all
channel members (manufacturer, wholesaler, wholesaler, retailer, &end user}

Physical possession
In SUPREME RICE MILL Physical possession has 30% cost, which includes storage and delivery cost in
which manufacturer is bearing 30% of total cost while wholesaler is bearing 40% because he buys
product in bulk and need more space for storage and does more deliveries than others while retailer and
end user have 20% and 10% cost respectively

Ownership
In SUPREME RICE MILL ownership has 16% cost in which manufacturer is bearing 20% of total cost
while wholesaler and retailer have 30% and 10% respectively and end user has highest percentage 40%
ownership than other members because he owns the product for long period of time

Promotion
Supreme Rice Mill is investing 20% in promotion of their product and manufacturer is investing 45% of
total cost because he wanted to create impact of their product in market and wants to attract more
customers and this will give him a good competitive advantage. while wholesaler and retailer have 30%
and 20% cost respectively and end user has 5% because he promoting product through positive word of
mouth.

Negotiation
Company is bearing just 5% of negotiation cost among that wholesaler has highest 40% cost because he
buys product in bulk and does more negotiation while retailer has 30% and end user have relatively low
cost

Financing
Company has 17% financing cost whereas manufacturer has highest 40% cost because he invest more in
producing the product and has high expense than other members while wholesaler has 30% because he
buys product in bulk and has high investment on the other hand retailer and end user have 20% and 30%
respectively

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Risking
most risk is beard by wholesaler 40% because he buys product in bulk and have more risk of spoilage of
product and have chance of not saling of product while retailer and end user have 20% and 10%
respectively

Ordering
Company has very little cost just 5% of total cost on which wholesaler has highest cost 40% of total cost
because cost of the packing of product and delivery cost in bear by wholesaler while end user has
minimum cost 10 % while retailer and manufacturer have 2% and 30% cost respectively

Payment
The highest payment is done by wholesaler 40% of total cost because he purchase product in bulk and
have to pay more money while end user buys in small quantity and pay less than other members while
manufacturer and retailer have 30% and 20% cost respectively

Calculation of profit
Profit is calculated by following steps

 Covert the final weight and the cost of member into decimals
 Multiply the converted values and add to next value answer
 In the end multiply with 100% in order to calculate profit into percentage

Profit of each channel member

 wholesaler has the highest profit margin because he is the most active person in the channel and
enjoys 34.3% of the total profit
 Manufacturer has 32.75% and retailer has 17.05% of the total profit while end user has 13.6% and
agent has 18.8%
 So in this regard, the end user gets the least profit 14.1% due to less effort in distribution channel

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Gap Analysis
Demand side gaps
At this time company is facing following gaps in order to meet the demand of the product

Segments Spatial Bulk Information Waiting Customer Product

convenience Breaking Provision Time service variety
Household Low High Low High Low High

(SOS<SOD) (SOS=SOD) (SOS<SOD) (SOS=SOD) (SOS<SOD) (SOS=SOD)

Gap Gap Gap
Industrial Low Low Low Medium Low High

(SOS=SOD) (SOS=SOD) (SOS=SOD) (SOS=SOD) (SOS<SOD) (SOS=SOD)

Gap

Household segment
Spatial convenience

Company’s product is not easily accessible due to which the supply is lower than the demand which
creates a shortage of the product.

Information provision

Supreme Rice Mill is not providing enough information related to their product which needs to be fulfill

Customer service

Company does not provide any customer service to its customer while purchasing the product and does
not have any assistance during the purchasing of product

 On the other hand there is no gap in bulk breaking service because company is meeting with the
demand of quantity which is required by its customer
 The waiting time service is provided in a favorable way as rice is a staple product and nobody really
has to wait to get rice, hence the service of supply equals the service output demand.

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 Although, the product variety is high and the house holds receive the product as per supplied.

Industrial segment
 The company just have gap only in customer service because company does not provide this service
to their industrial customer even product delivery is totally managed by the customer while the other
services

Techniques for closing gaps in industrial segment

Household segment
In supply side the issue/gap occurs with the Retailer in the Household segment, who cause a problem in
the flow. Whenever, new rice enters in to the market, they store the rice in the warehouses for a few
months, and when the price of the rice increases with the demand of the product, they then sell it in to the
market. for this gap to be closed, the company should provide its product to the other wholesaler in the
same region or change the wholesaler and appoint somebody better than him who is able to handle the
price gauging and selling of the product

Industrial segment
When talking about the industrial sector, the Wholesaler cause an issue in the sense that whenever new
rice enters in to the international market, they are of relatively lower price which pushes them not to
purchase the rice. Due to which, the other channel members will not be able to receive the rice and so the
channel flows will get disturbed. For this, the company should try compensating the price so that the
wholesalers also get able to get their profit.

The closing techniques are shown in table.

Segmentation Channel Environmental/Managerial Supply side Techniques DOIDID

members and bounds gaps for closing action
flow they (affecting gaps creates other
perform which flow) gaps
Retailer Creates Temporary shortage Product
Household Supply the No
of product and when demand unavailable
product to
is high then they sell the for end user

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product another
retailer in
same region or
Change the
retailer
Wholesaler When the price of rice falls The retailer
Industrial Compensate in Reduction in
in international market, the and end user
price profit
wholesaler refuse to will not be
purchase the rice able to get the
supply

Degree of commitment
In order to maintain degree of commitment among the members of channels company takes following
steps.

Member as a business partner

SUPREME RICE MILL focus on the commitment of employees. Company considers its member as a
part of their business and values their efforts

Low employee turnover

Company believes Employees who are engaged in their work and committed to their organizations give
companies crucial competitive advantages - including higher productivity and lower employee turnover

Good commissions
in order to maintain commitment company gives good commissions and providing good quality at right
cost to its customers

Annual awards
Company hosts award function for channel members every year and distribute price among best sellers

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Conflicts
Channel conflict does not always have negative impact sometimes it is quite useful for the company

In SUPREME RICE MILL mostly conflicts occur between manufacturer and wholesaler due to difference
in goal and objective, misunderstanding and poor communication

Vertical conflicts
In supreme rice mill most of the conflicts occur due to difference in goals and objectives
misunderstanding and mainly due to poor communication between two channel members.

Dual distribution
Sometime retailer directly buys rice from the company due to reference power and does not involve
wholesaler which creates a disagreement between manufacturer and wholesaler.

Oversaturation
Another main conflict is oversaturation in which manufacturer deals with many wholesalers which are
running operations in same area which is reducing sales opportunities for individual dealer and ultimately
shrink profit

Partial treatment
Another common conflict is Partial treatment on which manufacture give some favor in price to his
special members

Price conflict
Channel members are setting their own prices, which ultimately increase the price of the product, and
devaluing the product in the market.

Performance conflict
Channel members just aren’t doing effectively what they said they would do like selling product,
maintaining inventory, shipping product

Conflict Resolution

Responsibility of conflict resolution

The ultimate responsibility of conflict resolution is of general manager and top management of company
consider its channel members most important because they made huge sales through them

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In Supreme rice mill channel conflicts are mostly handled by using channel power sources.

Power sources
SUPREME RICE MILL is using following powers in order to maintain and resolve the conflicts of its
members.

Reward power
Supreme Rice Mill is using Reward power in order to convince and maintain channel member Company
in the form of

 good commissions
 in the form of prize
 in the form of credit sales

Legitimate power
In order to avoid conflict company makes legal agreement or contract between its channel members in
order to keep committed to its channel.

Reference power
Sometimes company use reference power In order to convince a particular member which have a famous
identity in market and realize that this member can make huge sales for company

Conclusion
At the end I want to conclude that SUPREME RICE MILL is producing quality products and distributing
its products through proper channel structure. SUPREME RICE MILL products is available in Lahore
only which needs to expand to other cities

Apart from that company is providing different services in order to satisfy their customers while each
member of the company’s channel is enjoying good profit company also facing some gaps in its
distribution channel which needs to be fulfill because the company sale force and communicating
decisions depends on how much training, motivation and support its channel member need and the
company success totally depends upon the performance of channel’s member

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Recommendations
 Company should Build relationships at each step of your channel member
 Company should know who best sales performers in the channel are. And should identify and
improve underperforming partners and keep your top performers happy.
 Establish a pricing strategy and stick to it. Company should treat all its customer fairly
 Company should avoid direct sailing of their product to wholesaler and retailer. Because its creates
the distrust between wholesaler and company
 Company should investing on promotional campaigns that may attract more customers for company
 Company should try to sale its product through a well-known members of a market

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