A detailed presentation of Supply Chain Management of Aggarbati industry including five forces model, CPFR, Krailjaic matrix, CRM techniques, the 3 A s, IT applicability, reverse logistics, balanced score card etc.

1. Nothing Comes Between my Vayu and my God……
Prepared By:- Durgadatta Dash)

2. 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.

3. 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.

4. 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)

5. 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

6. 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

7. 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.

8. 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.

9. 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.

10. BILLS OF MATERIALS
• Jicket Powder
• Charcoal Powder
• Bamboo Stick
• Nargis Nueva Powder
• Lignite Powder

11. 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.

12. MACHINES THAT WE ARE USING

13. SUPPLIER SELECTION PROCESS
Problem
recognition
General
need
description
Product
specification
Supplier
search
Personal
solicitation
Supplier
selection
Order – routine
specification
Performance
review

14. 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

15. 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.

16. 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 .

17. Suppliers Supply Chain Diagrammatic Representation
Shree Hari
Traders
Soham Timbers
Ltd
Nishan Products
Alexis Enterprise
Matushri
Industries
Khurda Plant
Material Cost Transportation Cost
Jajpur Warehouse
Sambalpur warehouse
Rourkela Warehouse
Khurda Warehouse
Manifacturing
Cost
Distributors
Retail Stores
Kirana and Grocery
Shops
Scarment Stores
Cust
ome
rs
Inventory Cost

18. 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 .

19. 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
delay
Always aware of the supplier trends and new suppliers or the suppliers from out
borders who can supply us in satisfying our company requirements
Suppliers 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.

20. 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

21. 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.

22. 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.

23. 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.

24. • 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.

25. KRALJIC’S MATRIX
Items used
for essence
Bamboo stick,
Charcoal and
jicket powder
Sandalwood
Powder, Nargis
Nova Powder
and Chemicals
Lignite Powder

26. PORTER’S FIVE FORCES MODEL
This model is
used to do
the market
analysis
which helps
in the
KRALJIC
MATRIX

27. 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.

28. 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

29. 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

30. 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.

31. 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

32. 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.

33. 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.

34. 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.

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

36. REASONS FOR REVERSE LOGISTICS
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

37. 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

38. 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.

39. 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.

41. 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.
• Customer
What do our customers require from us and how are we doing according to those
requirements?