Supply Chain Management of Rahimafrooz Batteries Limited (RBL)

1. INTRODUCTION

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm. Supply chain management, then, is the active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by the supply chain firms to develop and run supply chains in the most effective & efficient ways possible. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

The organizations that make up the supply chain are “linked” together through physical flows and information flows. Physical flows involve the transformation, movement, and storage of goods and materials. They are the most visible piece of the supply chain. But just as important are information flows. Information flows allow the various supply chain partners to coordinate their long-term plans, and to control the day-to-day flow of goods and material up and down the supply chain.

Supply chain management is typically viewed to lie between fully vertically integrated firms, where the entire material flow is owned by a single firm, and those where each channel member operates independently. Therefore coordination between the various players in the chain is key in its effective management. Cooper and Ellram compare supply chain management to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race.

1.1 Supply Chain

All stages involved, directly or indirectly, in fulfilling a customer request are called supply chain. It includes manufacturers, suppliers, transporters, warehouses, retailers, and customers. Within each company, the supply chain includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, customer service). Customer is an integral part of the supply chain. It includes movement of products from suppliers to manufacturers to distributors, but also includes movement of information, funds, and products in both directions. It is more accurate to use the term “supply network” or “supply web”.

1.2 Flows in a Supply ChainMaterials, Information, Invoicing

Suppliers

Manufacturers

Dealers Customers

After-sales service, Order information, funds

1.3 Supply chain stages:

CustomersRetailersDistributorsManufacturersSuppliers

All stages may not be present in all supply chains. So, Supply chain management is the management of flows between and among supply chain stages to maximize total supply chain profitability.

1.4 The Goal of a Supply Chain

1. Maximize overall value created:

Supply chain value is the difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer’s request. Value is correlated to supply chain profitability (difference between revenue generated from the customer and the overall cost across the supply chain).

2. Maximize total supply chain profitability:

Supply chain incurs costs (information, storage, transportation, components, assembly, etc.). Supply chain profitability is total profit to be shared across all stages of the supply chain. Supply chain success should be measured by total supply chain profitability, not profits at an individual stage. Sources of supply chain revenue: the customer Sources of supply chain cost: flows of information, products, or funds between stages of the supply chain

FG: A Schematic of a Supply Chain

2. COMPANY BACKGROUND

Rahimafrooz is one of the respected and reputed business houses in Bangladesh. It has just crossed 50 years of operation. Rahimafrooz has endured turbulences of the last 50 years and has been able to transform itself from a small trading company into a leading diversified business house. This is, indeed, a milestone, which Rahimafrooz has achieved with trust, support and dedication of all stakeholders, past and present, most importantly, its customers. Rahimafrooz began its operation as a trading company in 1954. Today Rahimafrooz has diversified in many areas from storage power solution to automotive aftermarket to retailing.

Rahimafrooz operates in three broad domains: automotive after market, power and energy, and retail chain. It sells tyres, batteries, lubricants, emergency power products, diesel as well as gas generators, lighting products, electrical accessories, solar systems, energy solutions using compressed natural gas, and power rectifiers. The Group also runs 'Agora' the first retail chain in Bangladesh. The Group’s portfolio includes international tyre brands Dunlop and Kenda, and its own brand RZ Tyre. Rahimafrooz is the exclusive franchisee of the full range of world’s leading lubricant brand Castrol in Bangladesh.

Through Rahimafrooz IPS, UPS and Voltage Stabiliser, the Company enjoys clear leadership of the emergency power products market. The Company brings to Bangladesh leading gas and diesel generator brands – Pramac as well as Mitsubishi. It also markets home and industrial lighting products from General Electric USA (GE) and electrical accessories from Hager France. Rahimafrooz’s Renewable Energy division has been providing Solar solutions in collaboration with British Petroleum (BP).

The Company, in recognition of its solar efforts, received the McGraw-Hill Platt Global Energy Award in 2004 and the Global Ashden Award in 2006. Rahimafrooz also offers comprehensive solution provider for CNG refuelling, conversion, conversion centres, and maintenance. Rahimafrooz is also endeavouring into tyre retread, besides manufacturing and marketing emery cloths and abrasive papers. In a joint venture, the Group has enterprised into the first ever fibre optical commercial networking backbone in Bangladesh in the form of Metronet Bangladesh Ltd. (MBL).

Rahimafrooz, in 2001, made a breakthrough in the urban lifestyles by launching the first retail chain in the country – Agora. One of the SBUs of Rahiamfrooz Group, Rahimafrooz Renewable Energy Ltd. distributes solar home systems to underdeveloped rural regions of Bangladesh. For that, the company received the Ashden Award for Sustainable Energy in 2006. The Group has strengthened its market leadership at home while reaching out to international markets. Ranging from automotive after market products, energy and power solutions, to a world class retail chain – the committed team at Rahimafrooz is determined to ensure best in class quality standards and living the Group’s four core values

Integrity, Excellence, Customer Delight andInnovation.

Rahimafrooz

VISION

Be an enterprising Group of Taka 2,000 crore by the year 2010 with a diversified business portfolio focused on dynamic growth, excellence, innovation, customer delight in enriching our world.

QUALITY POLICY Rahimafrooz as a team are totally committed to customer delight through intelligent effort and continuous improvement.

ASPIRATION To be the most admired and trusted organization through excelling in everything Rahimafrooz do, following ethical business practices and adding value to stakeholders.

VALUES Integrity in all their dealingsExcellence in everything they doTotal commitment to customer satisfactionThinking ahead and taking new initiatives

TEAM Rahimafrooz foster en environment of learning and reward, taking pride in who they are and what they do.

OUR COMMUNITY Rahimafrooz strongly believes that doing good business means being good corporate citizen. The company always takes pride in serving the stakeholders and community in multifaceted ways.

Global Compact Rahimafrooz is a signatory of the Global Compact, a UN initiative that sets standard on Human Rights, Labor Relations, Environmental and Ethics.

EnvironmentEnvironment Management System (EMS): They have taken comprehensive measures to protect environment, complying not only to local requirements but also with ISO 14001.

Safe Disposal and Recycling of Used Batteries: Rahimafrooz has undertaken a nation-wide campaign to promote safe battery disposal and recycling of used battery.

Community Services Rahimafrooz regularly contribute personal, monetary and medical help to people disadvantaged by natural calamities and serious illness. Rahimafrooz also makes significant contribution to leading diabetic and cancer hospitals.

2.1 SBUs and Affiliations:

01. Rahimafrooz Batteries Limited

Produces all kinds of automotive and industrial batteries and one of the largest battery manufacturers in the SAARC region;  exports batteries in more than 19 countries

02. Rahimafrooz Distribution Limited

Maintains nationwide distribution network with more than 400 outlets covering entire Bangladesh; distributes mainly automotive and appliance battery, tyre, IPS, UPS and lubricants.

03. Rahimafrooz Superstores Limited

Emerges as leading chain superstore in Bangladesh, mainly covering Dhaka Metropolitan City area; carries more than 25,000 varieties of product.

04. Rahimafrooz CNG Limited Involves in setting up CNG stations; facilitates establishing CNG conversion centers; converts automobiles into CNG and provides technical solution

Rahimafrooz Batteries Limited

Rahimafrooz CNG Limited

Excel Retread Limited

Rahimafrooz Distribution Limited

SBU’s

Rahimafrooz Superstores Limited

Rahimafrooz Energy Services Limited

and support.

05. Rahimafrooz Energy Services Limited

Provides uninterrupted and clean power and a  fast growing power services company; establishes with objective to meet country's growing demand for power

06. Excel Retread Limited Retreads all types of tyres from cars to buses/trucks; one of the leading tyre retread centers

2.2 Rahimafrooz Batteries Limited (RBL)

Rahimafrooz Batteries Limited (RBL) is the largest lead-acid battery manufacturer in Bangladesh and offers an extensive range of automotive & customized industrial battery. It is one of the respected and reputed business houses in Bangladesh. It produces all kinds of automotive and industrial batteries. It manufactures over 300 different types of automotive and industrial batteries.  Its plant is ISO 9001 & ISO 14001 certified.  RBL has also extended its product line to secure power solution with UPS, Rectifier and VRLA Batteries with collaboration of Enersys-USA, Eltek-Norway, AEES-France. RBL has a successful story of installing solar power in the remote rural areas of Bangladesh. It has successfully installed more than 10,000 home solar systems in the remote rural areas of Bangladesh.

Rahimafrooz produces and markets a range of battery products – automotive, motorcycle, and appliance batteries, Industrial (deep cycle, traction, VRLA) batteries, IPS and UPS batteries, and rectifiers. Lucas and Spark are the leading names in the local battery market while Volta, Optus and Delta batteries are fast gaining equity as International brands.

The company has been serving this market for the past fifty years by introducing innovative products. Rahimafrooz Batteries Limited (RBL) is one of the key players in South Asia in its field and one of the largest battery manufacturers in the SAARC region; With undisputed market leadership at home, exports batteries in more than 35 countries in Asia, Middle East, Africa & South America. The Company has embarked upon an aggressive growth plan that includes becoming a significant global player in the international battery market.

Vision 2010:To be one of the top two storage power companies in SAARC by the year 2010

Brands

LucasOptusRahimafroozSparkVolta

2.2.1 Plant Capacity:

Rahimafrooz has state of the art manufacturing plant. It is equipped with all latest technologies with complete air treatment and lead-recycling management. RBL produces different types of batteries to meet the local and international market. Its capacity in Automotive Battery is 660,000 (N50) units per annum and   Industrial Battery is 41 million AH/annum. By the end of 2008 production capacity of Industrial Battery will be increase to 120 Million AH. All the products are manufactured under strict quality control and ensured by international certifications.

2.2.2 Collaboration Agreements

It has different technical collaboration agreements with Lucas Battery Company, U.K, Technical support Group (TSG), Hawker Batteries, UK, Invensys, UK, Hawker Batteries, UK, Eltek – Norway, AEES – France to ensure the quality of battery.2.2.3 Performance

SBU's Contribution to Group Sales

27%

40%

18%

6%9%

Rahimafrooz Batteries Rahimafrooz DistributionRahimafrooz Superstores Rahimafrooz Energy ServicesOther Units

Battery Production

Battery Production

85%

4%9%

2%

Automotive Industrial Solar Appliance

Battery Contribution

Sales of Battery

Sales of Battery

45%

55%

Export Sales Local Sales

2.2.4 Network

2.5 Product Overview

Rahimafrooz markets three major brands of automotive batteries: LUCAS, VOLTA and SPARK. All the batteries are produced under strict quality controlled plant of the Rahimafrooz Batteries Ltd. It has introduced new brand SPARK for the taxi cab. This specially designed to take the load and frequency of the taxi cab.

Lucas Automotive Dry Charge Battery:

12 Volt BatteryGerman Drive RangeHeavy Duty Range6 Volt BatteriesLucas PCM

Rahimafrooz manufactures specialized Industrial Batteries. The plant is equipped with modern production machineries and testing facilities including those for tubular plates. It

conforms to international standard ISO 9001 & ISO 14001and to JIS, DIN, BS and IEC specification. It produces a wide range of lead-acid industrial batteries with capacities from 20AH to 2500AH. The batteries are used for applications in telecommunication, power station, railway system, electric vehicle, forklift, ship, buoy lighting and solar power system.

Industrial Batteries

Deep CycleElectric Car BatteryIPB BatteryStandby StationaryTraction

Specific features of our industrial battery are:

Long lifeMinimum maintenanceLow internal resistanceHigh rate of discharge performanceHigh resistance to adverse mechanical and electrical conditionTolerance to extremes of temperature

Special Features:

Excellent cycling ability provides high reliability and exceptionally long lifeLarge electrolyte reservoir means high tolerance to water loss and minimal maintenance.High charging efficiencyLow self discharge, dry pre-charged platesRobust, clear case and rugged construction ensures mechanical durability

The quality, dependability, reliability and long service life of thicker Flat Plate deep cycle batteries are the result of balanced design of the plates, separators and incorporation of latest technical developments in lead acid battery technology.

2. Supply Chain Management of RBL

Rahimafrooz Distribution Limited (RDL) involves in the marketing and distribution of a wide range of products through its nation-wide distribution network. It deals mainly with tyres, automotive batteries, Instant Power system (IPS), UPS and lubricants. Its batteries are produced in Rahimafrooz Batteries Limited (RBL), which is ISO 9002 and 14001 certified.  Commitment to quality and customer satisfaction has been a motivating force behind the success of RDL. RDL markets three major brands of automotive batteries: LUCAS, VOLTA, VOLTA MF (Maintenance Free) and SPARK. All batteries are produced by RBL.

3.1 Objective

Supply Right products in Right place in Right time. The main objective of RBL supply chain is to minimize total supply chain cost to meet fixed and given demand, where the total cost is composed of raw material and other acquisition costs, inbound transportation costs, facility investment costs, direct and indirect manufacturing costs, direct and indirect distribution center costs, inventory holding costs, inter-facility transportation costs, and outbound transportation costs.

3.2 Supply Chain of RBL

A complete and integrated Sales and Distribution network is inevitable to make the products, services and related information available to the customers. RBL has own strong distribution network RDL which is highly disciplined and organized Sales and Distribution department to maintain smooth supply of their products, services and related information to fulfill the requirement of valued customers. The company virtually covers every single corner of the rural as well as urban area of Bangladesh. The company has a very large and competent having 451 dealers and 8 distributors to ensure product availability throughout the country.

3.2.1 Stages of supply chain

Stages of supply chain in RBL are as follows:

Customers: RBL target customers are automotive after market for battery.

Lead

Acid

Supplie

r

Plate

Supplie

rPackaging Supplie

rAccessory Supplie

r

Store

Nakalpara Factory

Finished Goods

Central Warehouse

Regional StorehouseDistributorsDealersCustomers

RBL’s Supply Chain

Product FlowInformation Flow

Retailers: RDL has more than 450 dealers all over the country through which RBL distribute the batteries and sale to final users.

Distributors: RBL has 8 exclusive distributors in the country who are controlling the dealers, obtaining information related to supply and demand of battery, handling customer companits etc.

Manufacturers: The main manufacturing plant of Rahimafrooz Batteries Limited (RBL) is situated in Nakalpara, Dhaka.

Suppliers: RBL has many suppliers for their lead acid, packaging, accessories etc.

3.2.2 The Cycles of Supply Chains

Processes in a supply chain are divided into a series of cycles, each performed at the interfaces between two successive supply chain stages. Each cycle occurs at the interface between two successive stages

Customer order cycle (customer-retailer) Replenishment cycle (retailer-distributor) Manufacturing cycle (distributor-manufacturer) Procurement cycle (manufacturer-supplier)

Cycle view clearly defines processes involved and the owners of each process. Each cycle specifies the roles and responsibilities of each member and the desired outcome of each process.

3.2.3 Cycles of Supply Chain of RBL Customer order cycle (Customer-dealer)

Replenishment cycle (Dealer-distributor)

Manufacturing cycle (Distributor-RBL)

Procurement cycle (Manufacturer-supplier)

Customer order cycleLike other cycle, in customer cycle consists of following sub-process

RBL: An Efficient Supply Chain

Customer Order

Replenishment

Manufacturing

Procurement Cycle

Customer

Dealers

RBL

Supplier

RBL StageMarkets Product

Buyer stagePlaces order

RBL StageReceives order

Buyer stageDeliver order

RBL Stage

Receives goods

Buyer stage

Returns if any flaws

3.3 Supply Chain Decisions in RBL

We classify the decisions for supply chain management of RBL into two broad categories -- strategic and operational. As the term implies, strategic decisions are made typically over a longer time horizon. These are closely linked to the corporate strategy the corporate strategy), and guide supply chain policies from a design perspective. On the other hand, operational decisions are short term, and focus on activities over a day-to-day basis. The effort in these types of decisions is to effectively and efficiently manage the product flow in the "strategically" planned supply chain. In RBL, there are four major decision areas in supply chain management:

1) Location,2) Production, 3) Inventory, and 4) Transportation (distribution),

3.3.1 Location Decisions

The geographic placement of production facilities, stocking points, and sourcing points is the natural first step in creating a supply chain. In RBL, the location of facilities involves a commitment of resources to a long-term plan. The management established production facilities in Dhaka with large size production units by which the product flows through to the final customer. These decisions are of great significance to RBL since they represent the basic strategy for accessing customer markets, and will have a considerable impact on revenue, cost, and level of service. RBL determines the decisions an optimization routine that considers production costs, taxes, duties and duty drawback, tariffs, local content, distribution costs, production limitations, etc. Although location decisions are primarily strategic, they also have implications on an operational level.

3.2.2 Production Decisions

The strategic decisions include what products to produce, and which plants to produce them in, allocation of suppliers to plants, plants to DC's, and DC's to customer markets. As before, these decisions have a big impact on the revenues, costs and customer service levels of the firm. These decisions assume the existence of the facilities, but determine the exact path(s) through which a product flows to and from these facilities. Another critical issue is the capacity of the manufacturing facilities--and this largely depends the degree of vertical integration within the firm. Operational decisions focus on detailed production scheduling. These decisions include the construction of the master production schedules, scheduling production on machines, and equipment maintenance. Other considerations include workload balancing, and quality control measures at a production facility.

3.2.3 Inventory Decisions

These refer to means by which inventories are managed. In RBL, inventories exist at every stage of the supply chain as either raw material, semi-finished or finished goods. They can also be in-process between locations. Their primary purpose of RBL to buffer against any

uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. The top management of RBL sets goals. However, RBL management has approached the management of inventory from an operational perspective. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location. These levels are critical, since they are primary determinants of customer service levels.

Central Warehouse Order Size Units of RBL

0

500010000

15000

20000

2500030000

35000

1 2 3 4 5 6 7 8 9 10 11 12Month

Units Month

Units

FG: Monthly Order Size Units for Central Warehouse for the Year 2007

Distributor Order Size Units of RBL

02000400060008000

100001200014000

1 2 3 4 5 6 7 8 9 10 11 12Month

Units Month

Units

FG: Monthly Order Size Units for Distributor Warehouse for the Year 2007

Dealer Order Size Units of RBL

0100200300400500600700800

1 2 3 4 5 6 7 8 9 10 11 12Month

Units Month

Units

FG: Monthly Order Size Units for dealers for the Year 2007

3.2.4 Transportation Decisions

The mode choice aspects of these decisions are the more strategic ones. These are closely linked to the inventory decisions, since the best choice of mode is often found by trading-off the cost of using the particular mode of transport with the indirect cost of inventory associated with that mode. In Bangladesh, RBL uses Truck as transport modes to send the batteries to final consumers. They have strong transport modes by which RBL is able to handle the transport costs efficiently and timely. For exporting batteries in foreign countries, RBL is shipping by sea, but they necessitate holding relatively large amounts of inventory to buffer against the inherent uncertainty associated with them. Therefore customer service levels and geographic location play vital roles in such decisions. Since transportation is more than 30 percent of the logistics costs, operating efficiently makes good economic sense. Shipment sizes Lot-for-Lot), routing and scheduling of equipment are key in effective management of the RBL's transport strategy.

3.4 Supply Chain Model & Achieving Strategic Fit

RBL’s supply chain model works on basically aligning the competitive & supply chain strategies. The Competitive Strategies of RBL are as follows:

Ensuring Lower Cost at all levelsDifferentiated products and service with cost efficiency

Based on this RBL has designing their supply chain strategy as follows for achieving strategic fit:

High quality productsFast Delivery with cost efficiencyEnsuring High Quality & Safety

3.5 Rahimafrooz Batteries Ltd (RBL): An Efficient Supply chain

Rahimafrooz Batteries Ltd (RBL) has an efficient supply chain. They focus more on cost-effective delivery than faster or quicker delivery. So their customer order cycle or the RBL’s order cycle occurs after they have managed their inventory and other supplies ready to deliver the productions. Means their manufacturing, procurement & replenishment cycle occurs before their customer order cycle. The customer order cycle occurs after RBL’s replenishment cycle, manufacturing & procurement cycle. So their Supply chain is efficient.

Logistical & Cross functional Drivers of RBL’s Supply Chain:

Based on RBL’s corporate strategy RBL designs their logistical and other cross-functional drivers’ strategies. Like any other supply chain RBL also have 3 logistical drivers as the facilities, inventory and transportations and have other 3 cross functional drivers such h as information system, sourcing and pricing. As RBL’s key focus is to provide an efficient supply chain based workflow so they maintain different levels of efficiency and responsiveness.

STRATEGIC

FIT Negotiate Land

in Strategic Location with

RBL

High Quality & Safety

Design Sourcing Plan

Fast Delivery with cost efficiency

Negotiate Optimal

Construction Cost

Ensuring Lower Cost at all levels

Differentiated Service with cost efficiency

RBL’s Supply Chain Strategies for achieving

strategic Fit

COMPETITIVE STRATEGIES

R

E

RE Efficient Responsive

RBL’s Corporate Strategy

RBL’s Supply Chain Strategy

RBL decision Making

E E

R E

Efficient

Following is the description of the level of responsive and efficiency for their logistical and cross functional drivers:

RBL follows efficiency for their facilities or production levels.

RBL tries to maintain responsive inventory management all through their supply chain.

RBL has an efficient transportation system for their supply chain. They have more than 120 trucks to carry goods.

For the other cross functional drivers such as sourcing and pricing RBL is efficient but they maintains responsive information structure at their supply chain.

SourcingSourcing is the set of business processes required to purchase goods and services. Sourcing processes include:

Supplier scoring and assessment Supplier selection Procurement Sourcing planning and analysis

Sourcing: Role in the Competitive Strategy

Firms can utilize optimal pricing strategies to improve efficiency and responsiveness Low price and low product availability; vary prices by response times

Supplier Assessment Factors

RBL assesses the following factors during selecting suppliers –

Replenishment Lead TimeOn-Time PerformanceSupply FlexibilityDelivery Frequency / Minimum Lot SizeSupply QualityInbound Transportation CostPricing TermsInformation Coordination CapabilityExchange Rates, Taxes, DutiesSupplier Viability

Procurement

The process in which the supplier sends product in response to orders placed by the buyer is called the procurement process. Goal is to enable orders to be placed and delivered on schedule at the lowest possible overall cost. There are two main categories of purchased goods:

Direct materials: components used to make finished goods

Indirect materials: goods used to support the operations of a firm

RBL periodically analyze its procurement spending and supplier performance and use this analysis as an input for future sourcing decisions Procurement spending is analyzed by part and supplier to ensure appropriate economies of scale.

Information Technology in a Supply Chain

Information Technology (IT) plays the following roles in RBL’s Supply Chain:

IT used throughout the supply chain to gather and analyze information Captures and delivers information needed to make good decisions

Information is the driver that serves as the “glue” to create a coordinated supply chain. Information must have the following characteristics to be useful:

Accurate Accessible in a timely manner Information must be of the right kind

Information provides the basis for supply chain management decisions

Inventory: demand patterns, carrying costs, stock-out costs, ordering costs

Transportation: costs, customer locations, shipment sizes

Facility: location, capacity, schedules of a facility; need information about trade-offs between flexibility and efficiency, demand, exchange rates, taxes, etc.

Effective use of IT in the supply chain can have a significant impact on supply chain performance. IT helps managers in the following ways –

Relevant information available throughout the supply chain allows managers to make decisions that take into account all stages of the supply chain

Allows performance to be optimized for the entire supply chain, not just for one stage – leads to higher performance for each individual firm in the supply chain3.6 Information Technology Infrastructure of RBL

Supplier Relationship Management (SRM

Internal Supply Chain Management

(ISCM)

Customer Relationship Management

(CRM)

Transaction Management Foundation (TFM)

1. Customer Relationship Management (CRM)This takes place between an enterprise and its customers downstream in the supply chain. Key processes of CRM of RBL are:

MarketingSellingOrder managementMaintenance Service center

3. Internal Supply Chain Management (ISCM)

ISCM includes all processes involved in planning for and fulfilling a customer order. ISCM processes:

Strategic PlanningDemand PlanningSupply PlanningFulfillmentCustomer Service

4. Supplier Relationship Management (SRM)

Those processes focused on the interaction between the enterprise and suppliers that are upstream in the supply chain. Key processes of SRM are:

SourceNegotiateBuySupply Collaboration

3.7 The Value Chain:

Linking Supply Chain and Corporate Strategy of RBLComponents of value chain of RBL are –

Competitive strategy:

RBL seeks to satisfy customers offering high quality and innovative products with reasonable price.

Product development strategy:

Product development strategy specifies the portfolio of innovative batteries that the RBL will try to develop

Marketing and sales strategy: Marketing and sales strategy specifies how the market will be segmented and product positioned, priced, and promoted. For example, Lucas and Spark battery for local market and Volta is for international market.

Highlyefficient

Somewhatefficient

Somewhatresponsive

Highlyresponsive

RBL

Supply chain strategy: Supply chain strategy of RBL determines the material procurement, transportation of materials, transportation of goods, and manufacture of batteries or customer maintenance service, distribution of product.

Fig: The Value Chain Responsiveness Spectrum

RBL is some what responsive in fulfilling customer’s demands and some what efficient to deliver quality products timely with a affordable price. RBL is implied by ability to –

respond to wide ranges of quantities demandedmeet short lead timeshandle a large variety of productsbuild highly innovative productsmeet a very high maintenance service level

Fig: Responsiveness Spectrum of RBL

NewProduct

Development

Marketingand

SalesOperations Distribution Service

Finance, Accounting, Information Technology, Human Resources

3.8 The Transaction Management of RBL

RBL uses an Enterprise Software System (ESS) for maintaining its transactions.

Order collection by

dealers

Orders submission to distributors

Orders Processing by

ESS

Creating challan

Preparing Delivery Package

Delivery by dealers

Money collection by

dealers

Submission to the distributors

or regional office

Adjustment by ERP (If any)

3.9 Distribution Network Design of Rahimafrooz Batteries Limited (RBL)

The steps taken to move and store a product from the supplier stage to the customer stage in a supply chain is called distribution. Distribution directly affects cost and the customer experience and therefore drives profitability. Choice of distribution network can achieve supply chain objectives from low cost to high responsiveness. Distribution network performance evaluated along two dimensions at the highest level:

Customer needs that are metCost of meeting customer needs

Elements of customer service influenced by network structure:

Response timeProduct varietyProduct availabilityCustomer experienceOrder visibilityReturnability

Supply chain costs affected by network structure:

InventoriesTransportationFacilities and handlingInformation

Distribution Network Design of Rahimafrooz Batteries Limited (RBL) are as follows:

3.9.1 Retail Storage with Customer Pickup

RBL has 450 over dealers in the country who are retailing the RBL’s batteries. Customer collects batteries from dealers. When they sell the customer, they give a CFQ Card for customer feedback.

Dealers

RBL

Product FlowInformation Flow

3.9.2. Distributor Storage with Carrier Delivery

For electric and industrial batteries RBL requires special storage conditions

3.9.3 Manufacturer Storage with Direct Shipping

Distributor/Dealer

RBL

Product FlowInformation Flow

Distributor/Dealer

RBL

Product FlowInformation Flow

3.9.4 Distribution of RBL’s batteries in foreign market

3.10 Forecasting and product Distribution of RBL

Role of Forecasting in a Supply ChainThe basis for all strategic and planning decisions in a supply chainUsed for both push and pull processes. Examples:Production: scheduling, inventory, aggregate planningMarketing: sales force allocation, promotions, new production introductionFinance: plant/equipment investment, budgetary planningPersonnel: workforce planning, hiring, layoffsAll of these decisions are interrelated

Distributor

Distributor

Distributor

Distributor

Distributor

Region 1

Region 2

Region 3

National Target

Distributor

Forecast flowDemand flow

Improved Forecasting

Reduce Material Flow Time

Reduce Waiting Time

Reduce Buffer Inventory

Economies of Scale Supply / Demand

Variability Seasonal

Variability

Cycle Inventory Safety Inventory Seasonal Inventory

DemandMatching of Supply and

Forecasting and product Distribution process of RBL

Monthly forecast for product sales is a top down process in RBL. First local target is place and then it is distributed to the regions and then to individual depots. But the demand flow is a bottom up process in RBL which originates from dealers and then goes to distributors. The estimates of level, trend, and seasonality are adjusted after each demand observation.

3.11 Inventory Management

Inventory management process of RBL can be explained by the following diagram –

Aggregating across products, retailers, or suppliers in a single order allows for a reduction in lot size for individual products because fixed ordering and transportation costs are now spread across multiple products, retailers, or suppliers. Benefits getting by RBL through aggregate planning are - same overall fixed cost, shared over more than one product, effective fixed cost is reduced for each product, lot size for each product can be reduced All dealers and distributors of RBL keeps 5% safety inventory for responding customer demand.

5. CONCLUSION

The supply chain of Rahimafrooz Batteries Limited (RBL) is made up of all the activities required to deliver products to the customer, from designing product to receiving orders, procuring materials, marketing, manufacturing, logistics, customer service, receiving payment and so on. Anyone, anything, anywhere that influences a product’s time-to-market, price, quality, information exchange or delivery, among other activities, is part of the supply chain.

Effectively integrating the information and material flows within the demand and supply process is what supply chain management is all about. In most companies, however, two major and very interdependent issues must be simultaneously addressed. The first deals with delivering products with customer-acceptable quality, with very short lead times, at a customer-acceptable cost—while keeping inventories throughout the supply chain at a minimum. The second issue, which tends to be less understood and accepted, is the need for high-quality, relevant and timely information that is provided when it needs to be known. For many customers and manufacturers, business processes and support systems will not measure up to the task of quickly providing planning and execution information from the marketplace to production and on to vendors so that the customer’s objectives are consistently met. The fact is most information supplied is excessive, often late and frequently inaccurate.

As a final point, it is articulated that, Rahimafrooz Batteries Limited (RBL) is following different strategies, taking different decisions, planning and operation, selecting right distribution network to make their supply chain efficient and respond to customer demands timely by delivering quality products and service to customers. To evaluate their supply chain performance, they follow a checklist and are assessed by top management of RBL.

Supply Chain Evaluation Check List of RBL

The following list of questions RBL used as a beginning benchmark to evaluate the progress of with supply chain management and to develop action plans.

1. We clearly understand the strengths and weaknesses of our current supply chain sub-processes and have developed action plans for improvement. Yes No

2. We have defined our supply chain improvement objectives and have unwavering management commitment to achieve superior performance in our industry. Yes No

3. Our supply chain system provides high-quality, relevant and timely information flow that effectively supports decision making for inventory replenishment, capacity activation and for synchronizing material flows at all tiers within the supply chain. Yes No

4. Supply chain process operational responsibilities are well-defined and personnel are thoroughly trained and cross-trained. Yes No

5. We have dismantled organizational silos that resulted in cross-functional barriers to high-velocity information and material flows. Yes No

6. Our supply chain has effective techniques for real-time planning, execution and controls, including the simulation of alternatives to support the short-cycle pull of material through the supply chain. Yes No

7. Our trading partnerships are well formulated and grounded in strategic supply chain alliance agreements. Yes No

8. All organizations in our extended enterprise have been trained and developed to perform new roles that require fast, high-quality decision making and material flow. Yes No

9. We continually review evolving logistical business models for their impact on distribution planning, movement of goods, cost, and cycle time and customer service. Yes No

10 Our information technology provides a system that truly mirrors what we want to do throughout the supply chain. Yes No

11. Our company has developed supply chain management to a core competency level. Yes No

12. We use performance measurements that encourage and reward behavior that improves supply chain performance. Yes No