“Exploring SupplyChain for Rupchanda

Soyabean Oil”A

Flagship band of“Bangladesh Edible

Oil Limited”

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Term Paper on

Supply Chain Management (MKT 418)

Section: 01

Topic: “Exploring Supply Chain for Rupchanda SoyabeanOil”

Submitted To: Saadia Shabnam

Assistant Professor

Department Of Business Administration

Submitted By:

Student Name IdRanjoy Kumar Roy 2009-2-13-064

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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 forRupchanda Soyabean Oil”

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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 [2009-2-13-064] ________________

Arindam Kumar Biswas [2009-2-10-274] ________________

Mahmuda Haque Sharna [2009-2-10-219] ________________

Md. Rabiul Islam [2009-2-10-248] ________________

Md. Saroar Alam [2009-2-10-230]________________

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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.

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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

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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

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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:...................................................................................................................................... 10Logistics 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 OF RAW MATERIALS:..................................................15

3.4MODE OF 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

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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

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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.

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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 people’s 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.

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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:

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“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:

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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 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.

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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.

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:

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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.

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.

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2.4 Strategic Fit between thestrategies

Strategic fit suggests about a blending of strategies where

a company will focus in both responsiveness towards

customers and efficiency towards the reduction of cost. In

case of Bangladesh Edible Oil Ltd, customer responsiveness

has given priority by introducing pouch pack soyabean oil

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.

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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:

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.

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3.1 Placing Orders:

Company places the order to get raw materials for continuing present production and securing future production. So, BangladeshEdible 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 supplier’s 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.

Farmers produce soyabean and store it for the contractor.

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3.3Supply of Raw Materials:

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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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.

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PART C: PHYSICAL DISTRIBUTION CHANNEL

4.0 Forecasting of Market Demand:

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.

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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.

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.

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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 a number of activities like

order preparation, order transmittal, order entry, order

filling and order status reporting. The process is discussed

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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 Factory office.

The process has been discussed by the above mentioned table.

DistributorDistributor estimates the asking amount to be ordered and deposit the money to the company's bank acount and fax the deposit slip to territory manager. Territory ManagerTerritory mangager varify the slip and forward it through email to the head office mentioning the amount of product to be deliveredHead OfficeHead office receives the email and completes the documentation upto the door of factoryFactoryOfficeAfter getting the document from head office the prduction manager starts the operation immediately

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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 distributor’s warehouses are used to stock the

product for spreading the product around the country. To be

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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.

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.

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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.

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

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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 Pareto’s 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.

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Ballou Rona;d H., J 2005, “Business Logistics / Supply ChainManagement”, 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