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Supply Chain of Pran Essay

It gave us an immense pleasure in presenting this assignment, which was assigned to us as a term paper of Business Logistics (413) course. In this paper, we have tried our level best to carry out all the requirements of a term paper.

We consider ourselves very privileged to prepare this term paper under your guidance. It has provided us with a great scope of applying the gathered classroom knowledge in the practical field. We must mention here that we are extremely thankful to you for your valuable guidance, tiresome effort and constant attention whenever required.

We will be pleased to answer any sort of query you think is necessary, as now and when needed. We would like to draw attention particularly on the matter that there is always a space for clarification of any relevant topic. We will be available to share the pleasure discussions.

We Remain Sir,
Yours Most Obedient Pupils,
Group Members of “PITCHBLENDE”,
B.B.A.(15th Batch), Section: B,
Department of Marketing,
University of Dhaka.

Acknowledgement

At the inception of preparing this Term Paper, we would like to express gratitude to the Almighty Allah for special blessing in completing it. There is an English proverb “Two head are better than one.” So, no one can obtain a noble objective alone. This term paper is an accumulation of many people’s endeavor. For this, we are indebted to a number of people who helped us to prepare this and for their kind advice, suggestions, directions, and cooperation and proper guidelines for this. Our heartfelt thanks go to Mohammad Anwar Hossain, course instructor of Business Logistics (413) for providing us the opportunity and for his appropriate suggestions, moral support and invaluable co-operation from time to time in completing the assignment especially in the last one month. Last but not least, we would like to thank our group members of this course.

Executive summary

PRAN Beverage Limited is uncompromisingly producing the best quality mango juice named Frooto. Frooto has the highest market demand among the agro-based juice products. PRAN Beverage Limited launched Frooto in the year 2007 with a promise to provide people a juice containing highest amount of vitamin A & C. Since its inceptions it always emphasizes on highest quality through continuous improvement process. It has the most effective and market oriented supply chain network that helps it to get huge market coverage. Considering customer convenience it has kept Frooto price very reasonable and also within the limit of customer purchase ability. It maintains a good coordination among the parties who help it to achieve a boost in profit. Our report covers the supply chain of drivers of Frooto mango juice. Here we discussed the Facilities, Inventory, Transportation, Information, Sourcing and Pricing method of Frooto.

About PRAN
PRAN stands for
Program for Rural Advancement Nationally

“PRAN” is currently the most well known household name among the millions of people in Bangladesh and abroad also. Since its inception in 1980, PRAN Group has grown up in stature and became the largest fruit and vegetable processor in Bangladesh. It also has the distinction of achieving prestigious certificate like ISO 9001:2000, and being the largest exporter of processed agro products with compliance of HALAL & HACCP to more than 77 countries from Bangladesh.

PRAN is the pioneer in Bangladesh to be involved in contract farming and procures raw material directly from the farmers and processes through state of the art machinery at our several factories into hygienically packed food and drinks products. The brand “PRAN” has established itself in every category of food and beverage industry and can boost a product range from Juices, Carbonated Drinks, Confectionery, Snacks, and Spices to even Dairy products.

Today, the consumers not only value “PRAN” for its authentic refreshing juice drinks products, but also for its mouth watering quality confectionery products with high visual appeal and exciting texture. We intend to expand our presence to every corner of the world and strive to make “PRAN” a truly international brand to be recognized globally.

Products:

PRAN is currently producing more than 200 food products under 7 categories i.e.-

* Juices
* Drinks
* Snacks
* Culinary
* Bakery
* Confectionary
* Dairy

As we are assigned to discuss about 6 particular drivers of supply chain performance related to a specific product, we will discuss about Frooto Mango Juice & the 6 drivers of supply chain performance related with Frooto Mango Juice.

About Frooto

Frooto is a beverage product of PRAN beverage Limited. It has deliciously natural and sweet taste. This fruit juice is derived from the local orchard during the harvest to ensure the freshness and quality. It is full of natural pulp squeezing fresh fruit, vitamins, mineral and other ingredients that make the juice refreshing, natural and nutritious.

It contains the following ingredients:

* Mango Pulp

* Water

* Sugar

* Citric Acid (E-330)

* Vitamin C (Ascorbic Acid E-300)

* Vitamin A (Beta Carotene E-160a)

* Stabilizer (E-415)

* Natural Identical Mango Flavor

Supply Chain Drivers of Frooto

The drivers of supply chain performance of Frooto are divided into two parts: These drivers are as follows:

* Facilities
* Inventory
* Transportation

Logistical Drivers

* Cross-Functional Drivers
Drivers of Supply Chain
* Information
* Sourcing
* Pricing

Figure: Drivers of Supply Chain of Frooto

These drivers interact with each other to determine Frooto’s supply chain performance. The structure of these drivers determines if and how strategic fit is achieved across the supply chain. Now we will discuss the impact of each of these supply chain drivers on the performance of Frooto’s supply chain.

Facilities
Facilities are mainly two types. These are –
* Storage sites
* Production sites

After acquiring raw materials, modules, component parts, & services they are transformed into finished goods at the Ghorashal factory. At this stage the collected fruits are transformed into pulp. Then some of these pulps are stored into company warehouses & others are used for production of finished goods.

In the storage sites or warehouses PRAN store their collected raw materials. There are 13 warehouses over the country owned by PRAN Beverage Limited. The depots are located at different areas around the country. Some of the warehouse locations are –

* Ghorashal
* Vulta
* Kaliganj
* Comilla
* Chittagonj
* Sylhet
* Moulavibazar
* Natore
* Barishal
* Tongi
* Khulna

The production and processing related functions are held at the factory. The quality control department actively checks the quality of production and takes necessary steps to maintain the standard. They have some specialized quality control procedures to check out whether the right quality product is being produced or not.

All their machineries and technologies used for production and packaging are approved and imported from the JC Technologies Japan. No direct contracts with hand and products are happened in the production system.

Inventory

Physical Inventory is a process that all companies with their own stocks or special stocks in their warehouse eventually face. To keep supply chains running smoothly, beverage companies need to efficiently store, move, and transport beverage products while keeping inventory levels down and tracking the shelf life. PRAN maintains a considerable amount of safety stock according to the market need.

As we know that for Mango Juice the main raw material is fruit, PRAN runs their own fruit gardens such as mango, litchi, apple, orange etc most of which are situated at Rajshahi. Moreover it deals with the farmers with the help of their dealers. They give advance payment to the farmers for producing and procuring fruits so that they can supply the fruits to the company timely. PRAN runs several training programs for farmers for a bumper harvest. After the fruits are ripened, dealers collect them from farmers. Then they are sent to the factory for further processing and warehousing. PRAN also collects fruit pulp from Pulp suppliers during the off season. This time they make payment after getting the shipment of fruits. PRAN contacts face to face with the farmers with the help of its dealers and by mail or telephone with its suppliers.

Transportation

Transportation entails moving inventory from point to point in the supply chain. The goals of transportation system are-

* To reduce costs.
* To increase customer service.

There are two types of transportation system. These are –

* Inbound transportation system
* Outbound transportation system

Inbound transportation system of PRAN includes collecting and carrying away raw materials from different areas to the storage sites or warehouses. PRAN use its own transportation vehicle as well as take help from private transportation agency.

In case of outbound transportation system we have to consider the distribution system of Frooto Mango Juice.

Within domestic regarding distribution system there are 543 dealers of PRAN Beverage all over the country. The following picture shows the existing sales network for PRAN Juice.

After producing goods at the production plant they are distributed to different sales location using outbound transportation system. PRAN use its own pickup vans to distribute the products from the warehouse to the different distribution centers located at 64 districts. In Dhaka and Chittagong city distribution carries the product using mini-vans to retailers. But, in other 62 districts the distributors use pickup vans to distribute the product to wholesalers and retailers purchase Frooto from the wholesalers using their own carriers.

Information

Information is one of the biggest drivers of supply chain system that strongly affects the supply chain performance. To produce Juice and its other goods PRAN needs to collect information about customer satisfaction with the product, their feedback about the product and any kind of suggestions or recommendations regarding product modification.

In case of Frooto, customers order to retailer or distributor. Retailer or distributor then passes this information to the manufacturer of Frooto. After getting orders manufacturer starts its production. In following figure the information flow is illustrated:

Manufacturer

Customer

Distributor/ Retailer Storage

Information Flow

Sometimes in terms of bringing any changes with the existing product customer information & their feedback about product is required. In that situation PRAN takes the help of following methods-

* Interactive marketing
* Marketing research

Interactive marketing:

Interactive marketing or communications take place when both sides pay attention to the other and respond to other. As a producer consumer goods PRAN use two types interactive marketing or communication system. These are –

* Online
* Conversation

* Online System

PRAN has its own website where through a particular form customer can submit his feedback or suggestions for a particular product. Assigned personnel from marketing department responses to that feedback or only type complain. Address- http://www.pranrflgroup.com/feedback/index.php

By log in this address anyone can submit his or her feedback or opinion. It also has facebook page where customer can also express their opinion about the product or service. Because of low internet accessibility interactive marketing through online is not so used.

* Conversation

PRAN has information center or customer service department through which it can communicate with the customer. If there is any problem with the product the consumers can directly or through the shoppers communicate with the company. The customer service department actively works with the customer problem and complains. This system works as important source of information for the company.

Marketing Research:

Sometimes to collect information PRAN conduct marketing research. It may take the form of survey on customers. The research may be conducted by themselves or with help of private consulting firm. They usually follow “Questionnaire Research Method”.

Sourcing

Sourcing can be done through 2 ways. These are –

* Outsourcing
* In-house sourcing

Basically outsourcing is used in case of non food products, garments goods, technological products etc. As food is directly related to health, companies producing this type of good uses in-house sourcing.

PRAN strictly maintains the quality of its products. They also need to maintain the confidentiality of the formulas of their products. So PRAN perform most of it’s the supply chain activities such as-production, storage, transportation or management of information within the company. That means they usually follow in-house sourcing.

But in case following activities they take help from outsiders.

* Collection of mango pulp.
* Purchase of water and sugar.
* Collection of PET Bottle.
* Purchase of chemicals.

When PRAN collects its raw materials from different remote areas they use outside transport agencies like – Surma Transport Co., Bismillah Transport Agency., Bashundra Logistics etc.

As well as though PRAN maintain their information system within themselves but sometimes to conduct customer research or survey they depend on different private research firm or consulting firm.

To conduct customer research they may take help from different educational institutions.

Pricing

Price is the sum of all the value that consumers exchange for the benefits of having or using the product on serves. Historically, price has operated as the major determination of buyer’s choice.

There are three stages at which the prices are fixed to the market in Bangladesh.

Firstly, the price, which is fixed by the factory, is called factory prices.

Secondly, the wholesalers collect PRAN juice product from the factory then they fix a price for juice pack and then sell to the retailers on sub dealers. This type of pricing is called wholesale pricing. The wholesalers pricing system are given below:

Wholesaler Price = Issue price + transportation cost + storage cost + packing cost+ Physical losses + other costs + profit margin.

Thirdly, the retailers then collect PRAN juice pack from the wholesalers. After keeping a certain profit margin, they fix a price. This type of pricing is called retail pricing.

Pricing strategy of Frooto:

The pricing strategy of Frooto Mango Juice is very specific and straight according to present market situation. Pricing decision is made through the discussion among the Managing Directors. As the PRAN has an objective to stay in the market as long as possible with its business it sets very reasonable price for Frooto than its main competitor “Frutika”.

Frooto uses uniform pricing policy across the country. The cause behind this policy is that the target consumers generally do not like bargaining.

The prices of different Frooto bottles are as follows:

Table: Pricing List of Frooto
Item Name| Weight| Pack Type| Price (Taka)|
Frooto Mango Juice| 250 ml| PET Bottle| 20|
Frooto Mango Juice| 500 ml| PET Bottle| 40|
Frooto Mango Juice| 1000 ml| PET Bottle| 70|

Value addition in Frooto Supply Chain

Manufacturing cost of Frooto 250 ml PET Bottle for PRAN Beverage Limited is 13 Taka. It sells it to distributor at Taka 15 that means the profit margin is 2 Taka. Wholesalers purchase Frooto 250 ml PET Bottle from the distributor or dealer at Taka 16. Wholesalers supply Frooto to retailer at Taka 18 per bottle that means wholesaler is earning Taka 2 profit per bottle of 250 ml Frooto. But customers have to pay Taka 20 for every 250 ml Frooto bottle. This means 2 Taka profit has been earned by the retailer. So, it is clear that Taka 7 has been considered as the addition of value in the Frooto supply chain.

Frooto’s overall supply chain drivers can be shown in the following figure:

Competitive Strategy
Supply Chain Strategy
Supply Chain Structure
Responsiveness
Efficiency
Logistical Drivers
Cross-Functional Drivers
Facilities
Inventory
Transportation
Information
Pricing
Sourcing

Figure: Overall supply chain drivers of Frooto

Conclusion

PRAN beverage limited is on the leading position among the country’s agro-based beverage sector. Frooto, a product of PRAN beverage Limited, has captured the largest market share in the countrywide juice market. We know that the profitability of a product depends on some factors. Supply chain is one of the critical factors. Considering this fact, PRAN beverage limited has become able to make a strategic fit between its competitive strategy and supply chain strategy to increase its responsiveness. And supply chain drivers of Frooto Mango Juice play a vital role to achieve strategic fit & to maximize supply chain profitability of PRAN. Finally, we think that if PRAN Beverage considers some reengineering in their supply chain like; reducing wholesaler and collecting mango from self mango orchard, the supply chain would become more responsive which will facilitate PRAN as the uncompetitive leader in the country’s juice market.

References
Book references
* Chopra, Sunil & Meindl, Peter, Supply Chain Management: Strategy, Planning and Operation, third edition (2012)

Web references
* www.wikipedia.org/pran
* www.pranfoods.net

Other References
* Personal contact with Tanvir Ahmed, Head of IT of PRAN. * Product Brochure of PRAN Beverage Limited.
* Md. Naimul Hasan Basir, Assistant General Manager, PRAN Sales


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