Nothing Comes Between my Vayu and my God……

Prepared By:- Durgadatta Dash)

PRODUCT MARKET SHARE AND DEMAND

• Our objective is to manufacture agarbatti made up of Jicket Powder, Charcoal Powder, Bamboo Stick, Nargis Nueva & Powder Lignite Powder .

• The market share we estimated is of around 50%. Though we are new entries but there are not so many competitors to us in Odisha. This estimation was done by calculating the total demand for agarbatti as almost all family uses agarbattis.

• The demand of agarbatti will be always there because Odisha is full of millions of temples and people also use agarbatti at their homes for worshipping and as also for room freshener.

• We have around 150 distributors all across Odisha covering entire 30 districts.

• Our estimated production is 600 million sticks per month and our estimated sales around 550million sticks per month.

NEED IDENTIFICATION

• Agarbatti is such a product that is used by every class of people regardless of low, middle and high .

• Agarbattis have been used long since religious prayer and at the household level, as a room freshener .

• The journey of agarbatti manufacture begins from Thanjavur region of Tamil Nadu in South India and gradually

spreads to other parts of the neighboring states. Wide spread utilization of herbal –based agarbattis for their

pleasing fragrances have also been found in theMiddle East, European countries and other parts of the world.

• Agarbatti manufactures are basically located in Tamilnadu , Karnataka, Delhi , Gujurat , Kolkata , Hyderabad

but still there is scarcity of manufacturers in Odisha.

• In Odisha agarbattis are generally imported from Kolkata and Hyderabad, if we set a manufacturing company

here then we can grab the entire market because Odisha is full of millions of temples .

• People of Odisha are very religious , if we provide agarbatti with a cheap cost and with the same or improved

fragrance then we can easily grab the entire market easily.

• Agarbatis will be available in a wide range of prices depending on their fragrance and the quality they can give

to the house.

TARGET MARKET IDENTIFICATION

• Local grocery shop(20,00,000) Our Target (10,00,000)

• Stationary shops(1,00,000) Our Target (50,000)

• Households (20,00,000) Our Target (10,00,000)

• Hotels(10,000) Our Target (5,000)

• Small shops nearby temples (10,000) Our Target (5,000)

• All Sacrament stores (20,000) Our Target (13,000)

• Wholesale distributors (especially of Puri and Bhubaneswar)(15,000) Our Target (9,000)

COST ANALYSIS

• For 1 month that is for 600 million agarbatti • Jicket Powder (200kg) = Rs.5,00,000• Charcoal Powder(200kg)= Rs.4,00,000• Bamboo Stick(1000million) = Rs.3,50,000• Nargis Nueva Powder(150kg) = Rs.2,80,000• Lignite Powder(100 kg) = Rs.2,00,000

Total = Rs.17,30,000

Total No packets produced in a month = 10,00,000

Inventory = 85,000

Total no Packets for Sale = 915000

Per packet cost Rs.10

So total sales = Rs.91,50,000

Employee Salary = Rs.10,00,000

Tax +Rent(machines and trucks)+electricity bills+ some other expenses = Rs.6,75,000

CONTD. LOGISTICS ANALYSIS

• Flow of material from supplier to manufacturer = Rs.30,000 * 2 = Rs.60,000 (By Own Truck)

• Flow of finished goods from manufacturer to distributors = Rs.2,00,000

• Flow of finished goods from manufacturer to company’s own retail stores = Rs.1,00,000

• From company plant to three warehouses = Rs.1,00,000

Total Logistics expenses = Rs.4,60,000

Holding Cost in warehouses = Rs.1,00,000 of three warehouses

Maintenance costs = Rs.20,000

PRODUCT EXPLANATION

•As far as agarbatti manufacture in India is concerned, the rural small and medium enterprise (SMEs) experts have identified agarbattis as a consumable good whose demand is increasing constantly. This sector has tremendous potential and capable of creating livelihood opportunities in the rural pockets, especially for the women. It is a cottage industry, as a result of which large-scale rural employment can be created to generate self employment and increase standard of living among the rural communities.• The north-eastern states have ample capacity to set-up agarbattis

enterprises at the community level in rural pockets.

PLANT &WAREHOUSE LOCATION

• The plant is situated in Khurda. Because here all the raw materials are easily available, low labor cost, for setting the factory enough land are also available.

• Khurda is very nearer to our two main target market that is to Bhubaneswar and Puri, so our transportation costs will be low and we can easily and frequently supply the product to our distributors.

• One of the warehouse will be in khurda itself. Another warehouses are located in Jajpur, Sambalpur and Rourkela which will be the warehouses for eastrn, western and southern part of Odisha respectively.

• The reason are these all 3 cities are well connected to Khurda by national highways and also railway facility is easily available .

• Another reason is that from Jajpur and Sambalpur warehouse we can serve some parts of Kolkata and Chhattisgarh.

FINANCIAL ASPECTS OF VAYU• Production Capacity  -  550millions per month. of Agarbatti Sticks per annum. 

i)   Covered Area  - 1 acres owned by 10000000 . 

• Fixed Capital:  Rs. 80,00,000

ii)  Machinery Equipment viz. Small Mixing Vessel, Wooden Plank for rolling, Dipping Vessel, Trays, Racks, Weighing Scale and Furniture etc. 

• Machinery cost : 6,30,000

iii)  Working Capital (for three months) 11,28,700

• Raw materials (viz. Acacia Powder, Jigat Powder, 

• Charcoal and Sandalwood Powder, Bamboo Sticks, Perfumes, Di-ethyl Phthalate/White Oil, Packing materials); and Staff, labor and rents etc. 

iv)  Total Capital Investment.  10,67,200 

v)  Cost of Production (per annum). 

• Recurring Expenditure, interest and depreciation. 5,41,970 

vi)  By sale of 1,10,000 packets of Agarbatti Sticks @ Rs.10/-  per packet. 11,00,000

vii)  Anticipated profit per annum.  3,50,000. 

viii)  Employment.  20 Nos. 

BILLS OF MATERIALS

• Jicket Powder• Charcoal Powder• Bamboo Stick• Nargis Nueva Powder• Lignite Powder

PROCESS• Agarbatti is made up of aromatic substances, base and binding agent. To get high quality

agarbatti stick, we mix :

i) Acacia Powder. ii) Jicket Powder . iii) Charcoal. iv) Bamboo Sticks. v) Sandal wood powder. 

Sandalwood(base) is crushed properly. After that add a bonding agent like water. We mix saltpeter(potassium nitrate) to allow for uniform burning. You will get a paste.

Roll this paste over a bamboo stick. After that it is dipped in fragrance of your choice (like lavender ,jasmine,etc).

Finally incense sticks are air dried in sun .Now you have your agarbatti or incense stick ready.Just burn your agarbatti and enjoy its beautiful fragrance.

MACHINES THAT WE ARE USING

SUPPLIER SELECTION PROCESS

Problem recognition

General need

description

Product specification

Supplier search

Personal solicitation

Supplier selection

Order – routine

specification

Performance review

SUPPLIERS

1.Shree Hari Traders for Jicket Powder

2.Soham Timbers Ltd for Bamboo Sticks

3.Nishan Products for charcoal Powder

4.Alexis Enterprise for Nargis Nueva Powder

5.Param Perfume for Sandal wood Powder

6.Matushri Industries for lignite powder

MAJOR DISTRIBUTORS• Ajaya agencies – Bhubaneswar

• Alok agarbattis – Bhubaneswar

• Jai jagannath Dhup – Bhubaneswar

• Pathak Wholesalesrs – Jajpur

• Kunal Distributors- Jajpur

• Mahalxmi Stores – Puri

• Sanjay Distributors – Puri

• Choudhury And Sons – Sambalpur

• Sipra’s – Raorkela

• Srabani Agencies – Cuttack

• Aditya Distributors – Cuttack

• Dash and Co. – Balasore

We also have our own retail store in the Puri , Bhubaneswar, Jajpur and Cuttack.

MODES OF TRANSPORTATION

• We will basically depend upon our and leased trucks for the flow of finished products from the plant to our main warehouses . We Own two trucks by which usually products will go from Plant (Khurda)to our two main ware houses those are in Puri and Bhubaneswar .

• To send to other ware houses we depend upon leased trucks and sometimes on trains.

• To send products to our distributors, sometimes we will use our trucks (if our trucks are free ) for which we charge some amount of money but basically distributors have to use their own vehicles to get the product.

• Sometimes that is during festival Seasons we will depend upon the railways because at that time there is huge demand for agarbatti and we have to send in bulk .

Shree Hari Traders

Soham Timbers Ltd

Nishan Products

Alexis Enterprise

Matushri Industries

Khurda Plant

Material Cost Transportation Cost

Jajpur Warehouse

Sambalpur warehouse

Rourkela Warehouse

Manifacturing Cost

Khurda Warehouse

Distributors

Retail Stores

Kirana and Grocery Shops

Scarment Stores

Customers

Inventory Cost

Suppliers Supply Chain Diagrammatic Representation

SUPPLIER RELATIONS MANAGEMENT

• Suppliers like Shree Hari Traders for Jicket Powder, Soham Timbers Ltd for Bamboo Sticks & Nishan Products are located in Khurda.

• Suppliers like are Alexis Enterprise for Nargis Nueva, Powder Param Perfume for Sandal wood Powder, Matushri Industries for lignite

powder are located in cuttack which is 30 km away from the plant khurda

• All other chemical suppliers are located near by the factory only .

• We are having our own packaging system .

• The company’s vision and purpose is to provide good quality agarbatti with beautiful fragrance and this was shared among all the

suppliers, to maintain strong supplier partners.

• We maintain personal relation and trust with suppliers in all aspects to maintain long run relation and to involve in company performance.

• Capabilities are checked perfectly in order to meet the customer need and demand.

• No delay in paying for the raw materials and we also pay our credit at right time so that all the suppliers will be loyal to us and we can

satisfy the customer needs perfectly .

CONTD.Continuous improvement is done internal the company and advices to suppliers are

given and the good one was awarded accordingly.Manufacturing suppliers are ISO 9000/Q9000 certified .SRM software is used to let know the manufacturing suppliers to know the present raw

material flow and present raw material so that they aware of supplying us with out delayAlways aware of the supplier trends and new suppliers or the suppliers from out borders

who can supply us in satisfying our company requirementsSuppliers innovative products like different packing styles are encouraged but in small

proportion in beginning. Maintain relation ship with new suppliers as this will be needed in expansion time and

find new ways in cost reduction.Logistics was assigned to outsourcing in order to concentrate the quality making of

capsule body.Supply chain of supplier was also studied and developed indeed.

CENTRALIZED PURCHASING SYSTEM

Centralized purchasing refers to the purchase of materials by a single purchase department. This department is headed and managed by a purchasing manager. Under centralized purchasing, all purchases made by the purchase department to avoid duplication, overlapping and the non-uniform procurement. A company has to follow the centralized purchasing of materials for ensuring proper materials control as well as efficient store keeping. Under this system, the purchasing department purchases the required materials for all the departments and branches of the company

ADVANTAGES

• Bulk quantity of materials can be purchased at a low price with favorable purchasing terms.

• The service of an efficient , specialized and experienced purchase executive can be obtained.

• Better layout of stores is possible in centralized stores.

• Economy in recording and systematic accounting of materials.

• Transportation costs can be reduced because bulk quantity of materials purchased.

• Centralized purchasing avoids reckless purchases.

• Centralized purchasing discourages duplications of efforts.

• Centralized purchasing helps to maintain uniformity in purchasing policies.

• Centralized purchasing helps to minimize the investment on inventory.

DECENTRALIZED PURCHASING

Decentralized purchasing refers to purchasing materials by all departments and branches independently to fulfill their needs. Such a purchasing occurs when departments and branches purchase separately and individually. Under decentralized purchasing, there is no one purchasing manager who has the right to purchase materials for all departments and divisions. The defects of centralized purchasing can be overcome by decentralized purchasing system. Decentralized purchasing helps to purchase the materials immediately in case of an urgent situation.

ADVANTAGES

• Materials can be purchased by each department locally as and when required.

• Materials are purchased in right quantity of right quality for each department easily.

• No heavy investment is required initially.

• Purchase orders can be placed quickly.

• The replacement of defective materials takes little time.

• Make-or-buy, Centralisation and De Centralisation decision is one of the key techniques for management practice. Due to the global outsourcing, they have become popular and frequent.

• Since the manufacturing and services industries have been diversified across the globe, there are a number of suppliers offering products and services for a fraction of the original price. This has enhanced the global product and service markets by giving the consumer the eventual advantage.

• If you make a make-or-buy decision that can create a high impact, always use a process for doing that. When such a process is followed, the activities are transparent and the decisions are made for the best interest of the company.

KRALJIC’S MATRIX

Items used for essence

Bamboo stick,Charcoal and jicket powder

Sandalwood Powder, Nargis Nova Powder and Chemicals

Lignite Powder

PORTER’S FIVE FORCES MODEL

This model is used to

do the market analysis

which helps in the

KRALJIC MATRIX

COLLABORATIVE PLANNING, FORECASTING AND REPLENISHMENT

• Yes CPFR is applicable to our business plan.• Forecasting is a process of predicting future demand by

Qualitative and Quantitative methods.• One thing about Forecasts is that they are always wrong.

CRM TECHNIQUES

• Has everything you need to manage your customers, prospects and sales pipeline, plus advanced security and reporting.

• Small businesses need to make every sales lead count and make every customer feel valued. And unless you have so few of either that you can keep them all in your head, you’ll need a properly configured CRM (Customer Relationship Management) application to grow your sales and ensure customer retention.

• Will make sure every prospect gets followed up

• Has integrated marketing for newsletters and email campaigns

• Has zero set up and configuration costs

• Is Cloud based

• Has won multiple awards for Best Small Business CRM system

• Through Retailers , Online feedback , Survey , On the spot

CRM TECHNIQUES TO IMPROVE

• Keep it simple

• Stay in touch

• Follow the golden rule

• Pay attention

• Care for your customers

• Be consistent

• Say thank you

AGILITY, ADAPTABILITY AND ALIGNMENT (THE 3 AS)

Best value supply chains have a different approach in managing the 3 As of supply chain management.

• Agility is the capacity to respond quickly to dramatic changes in supply and demand.

• An adaptive supply chain network is also dependent on real time integration.

• Alignment is necessary to improve coordination among supply chain partners.

CONTD.

1. Agility 

• Brings exclusive fragrances and purifies your close environment.

• Creates a pleasant atmosphere around and uplifts the mood.

2. Adaptability

• It is adaptable to those people who live by preparing Agarbatti.

• To those people who do daily puja.

• To those people who earn their livelihood by selling Agarbatti.

3. Alignment

• Sharing common objectives with suppliers and distributors.

• Sharing knowledge and developing each other in value chain

IT APPLICABILITY IN SUPPLY CHAIN FOR SRM

• Supplier Relationship Management is an integrated suite of procurement applications that dramatically cut all supply management costs.

• Supplier Relationship Management reduces spend on goods and services, streamlines procure-to-pay processes, and drives policy compliance.

• SRM you can examine and forecast purchasing behavior, shorten procurement cycles, and work with your partners in real time..

• SRM enable you to cut down your procurement expenses and to work more intensively with more suppliers than ever before.

IT APPLICABILITY IN SUPPLY CHAIN FOR CRM

• The importance of customer relationship management (CRM) within the supply chain is vitally important. This column offers my take on some important integration issues.

• The customer and the customer's customer have been a critical part of the supply chain since its inception. The customer is quite clearly what the supply chain is all about. Having procurement, warehousing, manufacturing and distribution in place is all well and good, but without a customer it is academic and lacking in profit.

IT APPLICABILITY IN SUPPLY CHAIN FOR SUPPLY CHAIN INTEGRATION

Computer-based systems for managing internal and external logistics (e.g. Enterprise Resource Planning Systems) has introduced new opportunities and new threats in the supply chain. At the same time customers are becoming more demanding, wanting the supply of a complex set of services rather than a single product. These changes increase the need for companies not only to collaborate with members of their supply chain but also to enhance levels of communication and customer service. In this environment the appropriate use of supply chain integration becomes a vital ingredient in corporate success.

REVERSE LOGISTICS

• Reverse Logistics Refers To The Skills Of Logistics Management To Reduce, Manage & Dispose-off Waste Arising From Products & Inputs

We are going to follow these processes for our reverse logistics:

• 1)Damage: damaged products we get back to the plant and we remanufacture it and again float it out.

• 2)Recycling: If the material get damaged or is of out of fashion we get it back and we recycle them for future use or for future fashion.

• 3)Recall: If any un-satisfaction from customers we would recall that products and solve the problem according to the customer satisfaction.

If there any are not sold by the distributor will be taken back

REASONS FOR REVERSE LOGISTICS

FUTURE TRENDS IN SUPPLY CHAIN MANAGEMENT

Expanding the Supply Chain• We want to expand our present distribution from Odisha to all over

India.• The expansion involves:

Breadth- After few years we want to increase our presence in different main cities in India.

Depth- We are planning for the involvement of second and third tier suppliers & customers

INCREASING SUPPLY CHAIN RESPONSIVENESS

• According to the change in the life style of people we will upgrade our products and we will be very responsive towards the customers. • We will try to compete the our competitors and set the Bench marking and

also we continuously try to reach beyond the Benchmarking.

BALANCED SCORE CARD

 The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. 

CONTD.

• Financial Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it.

• Internal Business Process This perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission)

• Learning and Growth Includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement.

• CustomerWhat do our customers require from us and how are we doing according to those requirements?