THE GENERIC VALUE CHAIN OF

BATA SHOE COMPANY

(BANGLADESH) LTD.

S. M. Nahid Newaz ID: 0420185

Kazi Mahtab Hossain ID: 0820407

A.K.M. Rafiul Hoque ID: 0820663

Mahiuddin Ahmed ID: 1211279

Started its operation in Bangladesh in 1962Two manufacturing facilities – Tongi and Dhamrai

Tongi Factory Dhamrai Factory

242 retail outlets

Primary Activities

Inbound LogisticsOperation of two manufacturing facilities - produces 110,000 pairs of shoes and sandals dailyRaw materials come from modern tannery facility located at HazaribagRaw materials must have to be provided within 7 daysJust-In-Time systemCancellation of orderOwn leather tannery factory at Dhamrai - 20% to 30% of raw materials.

ValueFollows Just-In TimeThe specified tannery factory provides the raw materials within specified period – Large amount of discountUsing own tannery factory for collecting raw materials – reduction in cost

Operations:Highly efficient machineries for finished products – Singapore and ChinaBata imports artificial material such as rubber, plastic and PVC from China and Thailand on contractual basis.Outsourcing processManual operations in functional process - paper work ERP -2002Collaborate demands and queries from marketing, finance, operation and merchandising department. Ensures augmentation of manufacturing process.ERP- queries to production and merchandise department.

ValueERP helps Bata to manufacture its finished products efficiently.Saves production time and ensures on time delivery in the market.

Outbound LogisticsThe company has its own vehicles – Truck, pick-up van and covered van. Finished products are usually dispatched form Central Distribution Center (CDC).

There are 300 outlets in whole Bangladesh. Daily sales records are posted at the end of workday

CDC gets the daily update and the last situation of retail stores. Special orders are placed on demandable products. An area manager ensures the availability of the products into the specific stores through proper channel (telecommunication).

For instance: If products are needed within 24 hours it is usually informed to area manager and based on the information, he informs distribution manager at CDC and then it supplies the product lot to retail stores over the phone. Another way is to follow inter-transfer system, which is getting the products from nearby store.

ValueSince the company owns vehicles for logistic service, it does not have to go for 3rd party for vehicle operation. Thus it reduces cost associated with vehicle service.

Product delivery can be ensured within 24 hours with the help of Central Distribution Center and customer’s desired product can be provided to customer less than 24 hours by following inter-transfer system.

Marketing and SalesThe Bata Shoe Company (Bangladesh) Ltd. arranges “meet the press” at Ruposhi Bangla Hotel every quarter of the year.They also arrange fashion show whenever the new model of the product or new product is manufactured. TV commercial and advertisement on newspapers are provided on every special occasion – Eid, Puja, Valentine’s Day and Mother’s Day. In every retail outlet, Bata follows 5 steps customer policy:1.Welcome every customer.2.Ask him or her about the need.3.Show him or her three types of demanded product:

Customer’s own choices Similar to that choice Highest pricing product

4.Try to add-on selling (Socks, shoe polish and leather made bag).5.Thanking to come again.

ValueActivities like, “meet the press”, advertising on newspapers and TV commercial on special occasion attracts every level of customer. 5 steps customer policy also creates customer value.

ServiceIf the customer has any complaint regarding the product, he / she can bring cash invoice within 30 days whereas other shoe company requires that customer would bring the cash invoice within 7 days or less if the product has defect or gets damaged.

In Bata, a customer gets replacement even the product gets minor damage. In this case, customer has to deal with reasonable negotiation to repair the damaged product. As for major defect, they get full replacement.

ValueBata provides longer warranty coverage periods which helps to create

more customer value.

Support Activities

Firm Infrastructure

Tongi and Dhamrai factory is located in eco-friendly area.Bata’s main retail office; Management Information System, Merchandise, Human Resource department and 2 CDC are located in Tongi.Both factories have proper disposal system on air and underground. The disposable system helps to eliminate hazardous chemical dust. It ensures hygienic environment around the factory and outside the environment.Bata also follows occupational health and safety standard. Bata has safety and security department which ensures cleanliness and fire safety for the factory.

ValueFactories are located in eco-friendly area. Having proper disposable system and safety and security department, Bata provides sound and healthy environment to its personnel.

Human Resource ManagementBata’s Human Resource department is located in Tongi. Its industrial relation manager monitors, evaluates payroll and benefits inside the factory.Employee relation manager looks for retail, wholesale, finance and merchandising department’s employee.A proper training is conducted every month and during the time of recruitment:

Product knowledgeVisual merchandise (how to display products in retail outlet)Customer service trainingTraining on logistics (How to collect raw materials from suppliers and how to send finished product to retail houses.)

ValueProper training conducted by HRM department is valuable to company personnel. It augments the overall efficiency of employees in marketing and sales, operations and logistics.

TechnologyLatest technology is used in production department – Assembling machines are for assembling shoes and sandals, cutting machines are for cutting rubber and dice

machines are for shaping shoes and sandals.Quality control department ensures higher quality product before launching them to the market. Bata uses “Step Counting Machines” to check the temper and absorption power of the sole.Software named Point of Sales (POS) is used in every retail store. This software is used to keep the records of selling and transaction and send detail to MIS department.

ValueThe step counting machine helps to identify the durability and safety of their product. It also ensures foot comfort. POS software helps to send selling records and transactions to Head office.After getting the information from retail outlet, the company immediately measures how many products should be produced within short period in order to meet customer demand.

ProcurementBata usually buy raw materials from only one company. Bata has its own tannery which supplies 20% to 30% raw materials. Furniture, display materials are usually bought from Otobi and Raza plastic company.50% of payment is done after the supply of the product and the rest of 50% are paid 5 to 6 months later. As for tannery, Bata makes an argument with tannery factory that they will fulfill the payment after 1 year.

ValueThe company saves procurement cost by getting supply of raw materials from its own tannery factory.Late payment with other supplier helps Bata to deposit money to financial institute and bank as fixed deposit which ensures a profit gain over its suppliers.

ConclusionBy applying Generic Value Chain, Bata Shoe Company (Bangladesh) develops efficiency in its primary and support activities that helps it to become market leader among shoe companies.