Internship Report

On
“Supply Chain Management System of Aarong”

Course Code: BUS-499

Course Title: Internship

Submitted to:
Department of Business Administration
Leading University, Sylhet

Supervised by:
Md. Mahbubur Rahaman
Assistant Professor
Department of Business Administration
Head (Acting)
Department of Tourism and Hospitality Management
Leading University, Sylhet

Prepared by:
Rahat Islam
ID No: 1631010012
BBA Program
Major in Management Information System
Department of Business Administration
Leading University, Sylhet

Date of Submission: 29th October, 2020

 Letter of Transmittal

29th October, 2020

Md. Mahbubur Rahaman

Assistant Professor
Department of Business Administration
Head (Acting)
Department of Tourism and Hospitality Management
Leading University, Sylhet

Subject: Submission of Internship Report on “Supply Chain Management System of

Aarong”.

Dear Sir,
I am feeling happy to submit internship report on “Supply Chain Management System of
Aarong.” This report helped me to get a very good and proper understanding about the
Supply Chain Management System of Aarong. To prepare this report, I have given my best
effort despite some limitations.
I shall be highly encouraged if you are kind enough to receive this report. If you have any
further enquiry concerning any additional information I would be very pleased to clarify
that.

Thank You.

Sincerely yours,

……………
Rahat Islam
ID No: 1631010012
BBA Program
Major in Management Information System
Department of Business Administration
Leading University, Sylhet

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 Letter Declaration

I am Rahat Islam, ID No: 1631010012 hereby declare that I have carried out internship
report on the topic entitled “Supply Chain Management System of Aarong”.

I further declare that this internship report is based on my original work and no part of this
report has been published or submitted to anybody.

………………………….
Rahat Islam
ID No: 1631010012
BBA Program
Major in Management Information System
Department of Business Administration
Leading University, Sylhet

3
 Letter of Acceptance

I am enormously pleased to declare that, Rahat Islam, ID No: 1631010012, a student of the
Department of Business Administration, BBA program, Major in Management Information
System, Leading University, Sylhet, has been completed his internship report on “Supply
Chain Management System of Aarong” under my direct supervision. He discussed
different issues and problems relating to the report with me in preparing this report. He has
reviewed all the relevant information and collected the latest information from different
sources. Now I am fairly considered to let his to present and defend the same to the panel of
judges for evaluation.

I wish his all the best in every effort.

………………………………….
Md. Mahbubur Rahaman
Assistant Professor
Department of Business Administration
Head (Acting)
Department of Tourism and Hospitality Management
Leading University, Sylhet

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 Acknowledgement

All praise due to Almighty Allah who has given me the opportunity to do this report. The
successful completion of this report might never been possible in time without the help of
some person shows inspiration and suggestion made it happen.

I am highly thankful to Mohammad Shahansha Molla, Associate Professor & Head,

Department of Business Administration, Leading University, Sylhet for helping me in
preparing my report and for his sincere and sufficient direction.

I want to thank my honorable supervisor Md. Mahbubur Rahaman, Assistant Professor,

Department of Business Administration, Head (Acting), Department of Tourism and
Hospitality Management, Leading University, Sylhet for helping me completing my report
on “Supply Chain Management System of Aarong”.

I also, thank my parents and some friends who keep on this long process with me. Always
offer support.

And finally I also express my sincere gratitude to all those who participated to prepare the
report.

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 Executive Summary

When my supervisor has given the topic, I working on my report at the beginning, I have
faced some problems that is to find out the status of supply chain management system of
Aarong, Aarong there all employees are so busy with their daily work and activities, so it is
quite impossible sometime to get time from them for getting information and internal
information which is very difficult to collect from any other sources. I have tried to describe
the supply chain management of Aarong and also tried to evaluate the collections of supply
chain management at Aarong. I have added here some recommend steps for further
development of supply chain management of Aarong. The study of my report is descriptive
and exploratory in nature. All judgmental and convenience sampling techniques are used
here. I have to talk with the employees and executives of Aarong, Sylhet outlet. This report
process I follow to collect the required data to solve my problem that is primary and
secondary data. Mainly this report based on secondary data, secondary data has collected
websites, Journals and some other relevant documents. All graphical data were processed
through computer using MS Excel package program shows some information and charts.
After analyzing all the collected data I found that lack of marketing policy, Aarong promote
advertise only their website for this their campaign is getting less, employees lack expertise
in IT and Supply chain process. Aarong marketing policy need to improve and upgrade
based on new era of marketing by building strong relationship with existing customers.
Because now all the big branded house focusing more on building a strong relationship with
their customers and Aarong must focus on train their employees about Supply Chain, IT and
Public Relationship. Meanwhile I have included my suggestions and recommendations in
order to eradicate the weaknesses of the departments

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 Table of Contents

SL. No. Particulars Page No.

Chapter-One
Introduction
1.1 Introduction 10
1.2 Background of the Study 10
1.3 Objectives of the Study 11
1.4 Scope of the Study 11
1.5 Methodology of the Study 12
1.6 Limitations of the Study 13
Chapter-Two
Theoretical Overview
2.1 What is Supply Chain Management (SCM) 15
2.2 What is a Supply Chain 15
2.3 What is Management 15
2.4 The Importance of Supply Chain Management 16
2.5 Supply Chain Cycle 16-17
2.6 Theoretical Frame Work on Supply Chain Management System 17-22
2.7 Supply Chain Management – An Industry Strategy & Technology 22-23
2.8 Linking the supply chain to the business Strategy 23-24
2.10 The Impact of Supply Chain Management on Performance 25
Chapter-Three
Organizational Overview
3.1 Organization Overview of Aarong 27
3.2 Vision, Mission, Objective & Values 28
3.3 Naming Aarong 29
3.4 Current Scenario of Aarong 29
3.5 Products / Services Offering 30-31
3.6 Some Product Picture 32
3.7 Organizational Structure of Aarong 33
Chapter-Four
Supply Chain Management Practice of Aarong
4.1 Aarong’s Supply Chain 35

4.2 How Aarong Supply Chain Management System is build 36

4.3 Supply Chain Planning System 37
4.4 Supply Chain Execution System 39
4.5 Aarong’s Supply Chain Management Process 40
4.6 Aarong’s Supply Chain Management Information Flow 41
4.7 Aarong’s Performance Improvements by Supply Chain 42
Management

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4.8 Competitive Advantage of Aarong’s Supply Chain Management 42
System
4.9 Systems are currently used in Aarong 43
4.10 Facing the problems below when using these systems 43
Chapter-Five
Findings, Recommendations & Conclusion
5.1 Findings 45
5.2 Recommendations 46
5.3 Conclusion 47
Reference

Chapter One
Introduction

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1.1 Introduction
In today’s competitive world of Business competitive advantage can be gain by proper
information system and developing that information system. Aarong information system is a
sign of the modern business organization of Bangladesh. Supply chain management is the
streamlining of a business' supply-side activities to maximize customer value and to gain a
competitive advantage in the marketplace. Supply chain management (SCM) represents an
effort by suppliers to develop and implement supply chains that are as efficient and
economical as possible. Supply chains cover everything from production, to product
development, to the information systems needed to direct these undertakings.

1.2 Background of the Study

Aarong emanated from BRAC’s core mission of alleviating poverty and empowering
people.
In the 1970s, BRAC was examining any and all possibilities for alternative forms of
productive livelihood, especially for women, and the proper commercialization of art and
crafts turned out to be a promising option. In December 1978 when BRAC decided to open
its own retail outlet under the brand name Aarong, meaning ‘village fair’, it broadened its
arms to include other artisans and master craftsmen throughout Bangladesh who were
involved in the making of handicrafts for generations, and were finding it extremely
difficult to survive in the newly formed country. Ever since then Aarong has been helping to
establish market linkages for rural artisans, revive crafts and interpret them for the
contemporary marketplace.

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1.3 Objectives of the Study

Broad Objective:
The general objective of the study is to find out the factors that influence status of supply
chain management system at Aarong.

Specific Objectives:

1. To study available theory and literature on Supply Chain Management System.

2. To study Supply chain management system of Aarong.
3. To evaluate the effectiveness of Supply chain management at Aarong.
4. To recommend steps for further development of Supply chain management of
Aarong if required.

1.4 Scope of the Study

The study focuses on the supply chain management system of ‘Aarong’. Moreover, the
report is prepared understanding and concerning the organization’s confidentially. There is
an opportunities to know how Aarong are connecting with its rural artisans and doing
business activities. This model can help others organizations to follow Aarong as well as the
study will help Aarong to know what it should do in respect of maintaining long term
relationship with its suppliers.

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1.5 Methodology of the study

1.5.1 Research Design:

The study is descriptive and exploratory in nature.

Population:
All the employees of Aarong.

Sample:
Employees and executives of Aarong, Sylhet outlet.

Sampling Technique:
Judgmental and Convenience sampling technique were used.

1.5.2 Data Collection Technique:

1. Personal Interview: Face to face conversation with the Employees and

executives of Aarong, Sylhet outlet.
2. Observation: I have visited Aarong’s Sylhet Jail Road Branch and observed
their supply chain.
3. Secondary source: Data also has collected by reviewing websites, Journals and
some other relevant documents.

1.5.3 Sources of Data Collection:

1. Primary Sources of Data: the primary data is gathered through informal interviews
of the employees and observation.

2. Secondary Sources of Data: Secondary sources had also used to collect data.
Secondary sources include:
 Features and articles published in newspapers and other journals.
 Visiting website of Aarong super store

1.5.4 Data Presentation

Collected data are presented by the graphical and tabular method and descriptive analysis
technique is used for analyzing the data.
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1.6 Limitations of the Study
In every research work there are some limitations that the researcher face while conducting
different activities. In the process of research work, I also come across certain limitations
that hampered the actual findings and analysis of my study. Some of limitation can be
identify are-

1. Employees of Aarong are usually busy with their daily work and activities, so it is
quite impossible sometime to get time from them for getting information about my
study.

2. Sometime the authority does not provide their internal information which is very
difficult to collect from any other sources.

3. This is quite difficult to collect all the data of supply chain management of Aarong.

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 Chapter Two
Theoretical Overview

13
2.1 What is Supply Chain Management (SCM)
Supply chain management is the management of the flow of goods and services and
includes all processes that transform raw materials into final products. It involves the active
streamlining of a business's supply-side activities to maximize customer value and gain a
competitive advantage in the marketplace.
SCM represents an effort by suppliers to develop and implement supply chains that are as
efficient and economical as possible. Supply chains cover everything from production to
product development to the information systems needed to direct these undertakings.

2.2 What is a Supply Chain

A supply chain is a network between a company and its suppliers to produce and distribute
a specific product to the final buyer. This network includes different activities, people,
entities, information, and resources. The supply chain also represents the steps it takes to get
the product or service from its original state to the customer. 
Supply chains are developed by companies so they can reduce their costs and remain
competitive in the business landscape.

2.3 What is Management

Management is essential for an organized life and necessary to run all types of management.
Good management is the backbone of successful organizations. Managing life means
getting things done to achieve life’s objectives and managing an organization means getting
things done with and through other people to achieve its objectives.
Whether management is an art or science, will continue to be a subject of debate. However,
most management thinkers agree that some form of formal academic management
background helps in managing successfully. Practically, all CEO’s are university graduates.
Hence, the reason for including business degree programs in all academic institutions.

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2.4 The Importance of Supply Chain Management
It is well known that supply chain management is an integral part of most businesses and is
essential to company success and customer satisfaction. 

 Customers expect the correct product assortment and quantity to be delivered.

 Customers expect products to be available at the right location. (i.e., customer
satisfaction diminishes if an auto repair shop does not have the necessary parts in
stock and can’t fix your car for an extra day or two).
 Right Delivery Time – Customers expect products to be delivered on time (i.e.,
customer satisfaction diminishes if pizza delivery is two hours late or Christmas
presents are delivered on December 26).
 Right After Sale Support – Customers expect products to be serviced quickly. (i.e.,
customer satisfaction diminishes when a home furnace stops operating in the winter
and repairs can’t be made for days)

2.5 Supply Chain Cycle

A simplistic representation of a supply chain involves a sequence between five stages, from
a supplier to the final customer. Each of these stages has its own cycle, which is a sequence
of operations and transactions taking place between two stages.

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  A customer order cycle takes place when orders are processed, prepared and
shipped. For retail, it is often the customer that is picking his order from the store
inventory (shelves). In a pull logistics system, customer order cycles are particularly
important since they are the driver of further cycles upstream the supply chain.
 The replenishment cycle concerns the steps involved to re-supply outlets from
distribution centres.
 The manufacturing cycle concerns the scheduling of production in light of the
demand from distributors.
 The procurement cycle involves the scheduling of the components required in the
manufacturing of a good.

2.6 Theoretical Frame Work on Supply Chain Management System

Supply chain management systems are integrated partnerships among all links in the flow of
goods and services to the customer. They are created for the purpose of improving quality,
reducing costs and achieving competitive advantage in a world where lean manufacturing
and specialization force companies to rely on one another for valuable productive activities.
All supply chain activities, including planning, sourcing, producing, delivering and
providing for returns, are handled collaboratively within an integrated supply chain to
ensure the maximum use of shared resources.
In the current competitive scenario supply chain management assumes a significant
importance and calls for serious research attention, as companies are challenged with
finding ways to meet ever-rising customer expectations at a manageable cost. Supply chains
encompass the companies and the business activities needed to design, make, deliver, and
use a product or service. Businesses depend on their supply chains to provide them with
what they need to survive and thrive. Every business fits into one or more supply chains and
has a role to play in each of them. To succeed in the competitive markets that make up
today’s economy, companies must learn to align their supply chains with the demands of
the markets they serve. Supply chain performance is now a distinct competitive advantage
for companies who excel in this area.

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Definitions:

Christopher (1998) defined the supply chain as the network of organizations that are
involved, through upstream and downstream linkages, in the different processes and
activities that produce value in the form of products and services in the hands of the
ultimate customer.
Chopra and meindl (2001) “A supply chain consists of all stages involved, directly or
indirectly, in fulfilling a customer request”.
Handfield & Nichols (1999)“A supply chain encompasses all activities associated with the
flow and transformation of goods from the raw material stage, through to the end user, as
well as the associated information flows”.
A supply chain may be defined as an integrated process wherein a number of various
business entities like a) Suppliers b) Manufacturers c) distributors and d) Dealers,
Retailers etc.

Work together in an effort to:

(1) Acquire raw materials
(2) Convert these raw materials into specified final products, and
(3) Deliver these final products to retailers.

Recently, however, there has been increasing attention placed on the performance, design,
and analysis of the supply chain as a whole. From a practical standpoint, the supply chain
concept arose from a number of changes in the manufacturing environment, including the
rising costs of manufacturing, the shrinking resources of manufacturing bases, shortened
product life cycles, the leveling of the playing field within manufacturing, and the
globalization of market economies. The current interest has sought to extend the traditional
supply chain to include .reverse logistics, to include product recovery for the purposes of
recycling, re-manufacturing, and re-use. Within manufacturing research, the supply chain
concept grew largely out of two-stage multi-echelon inventory models, and it is important to
note that considerable progress has been made in the design and analysis of two-echelon
systems. (Benita M. Beamon)

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2.6.1 History
History of Supply Chain Management: The Early Years
In the 1940s and 1950s, the focus of logistics research was on how to use mechanization to
improve the very labor intensive processes of material handling and how to take better
advantage of space using racking and better warehouse design and layout. The “unit load”
concept gained popularity and the use of pallets became widespread. In the mid 1950s, this
concept was extended to transportation management with the development of intermodal
containers together with ships, trains, and trucks to handle these containers. This was a
prerequisite for the supply chain globalization that was to come much later. Although the
terms “warehousing” and “materials handling” were used to describe many of these efforts,
this work could be viewed as fundamental applications of industrial engineering rather than
as a discipline of it own.
By the 1960s, a clear trend had developed in shifting more time-dependent freight
transportation to truck rather than rail. This led to the need for joint consideration of
warehousing, material handling, and freight transportation, which emerged under the label
of “Physical Distribution.” The National Council of Physical Distribution Management was
formed in 1963 to focus industry attention on this area and quickly became the predominant
organization in the field. Academic research and education followed this trend to satisfy the
growing industry recognition of the needs in this area. This area gained much wider
recognition in both industry and academia due in large part to the fundamental paradigm
change that occurred during the 1960s and 1970s with regard to computers. Prior to the
1960s, virtually all transactions and record keeping were done manually. The
computerization of this data opened the door to a huge opportunity for innovations in
logistics planning, from randomized storage in warehouses to optimization of inventory and
truck routing. The technologies, particularly those from Operations Research, that
researchers had to this point only been able to examine in theoretical models had now
become much closer to reality. However, there were still many difficult research issues to
resolve in the transition from theory to practice. In the late 1970s and early 1980s, this led
to the creation at Georgia Tech of the Production and Distribution Research Center, the
Material Handling Research Center, and the Computational Optimization Center. Each of
these centers was focused on a different aspect of what this new computer technology made
possible.

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History of Supply Chain Management: Logistics Comes of Age
The 1980s marked the beginning of a sea-change in logistics in the history of supply chain
management. The emergence of personal computers in the early 1980s provided
tremendously better computer access to planners and a new graphical environment for
planning. This spawned a flood of new technology including flexible spreadsheets and map-
based interfaces which enabled huge improvements in logistics planning and execution
technology. The Production and Distribution Research Center was the early innovation
leader in combining map interfaces with optimization models for supply chain design and
distribution planning. The Material Handling Research Center provided leadership in
developing new control technology for material handling automation. The Computational
Optimization Center developed new large scale optimization algorithms that enabled
solution of previously intractable airline scheduling problems. Much of the methodology
developed in these centers rapidly began to find its way into commercial technology.
Perhaps the most important trend for logistics in the 1980s was that it had begun to get
tremendous recognition in industry as being very expensive, very important, and very
complex. Company executives became aware of logistics as an area where they had the
opportunity to significantly improve the bottom line if they were willing to invest in trained
professionals and new technology. In 1985, the National Council of Physical Distribution
Management changed its name to the Council of Logistics Management (CLM). The reason
given for the name change by the new CLM was “to reflect the evolving discipline that
included the integration of inbound, outbound and reverse flows of products, services, and
related information.” Prior to this, logistics was a term that had been used almost
exclusively to describe the support of military movements.

History of Supply Chain Management: The Technology Revolution

The logistics boom was fueled further in the 1990s by the emergence of Enterprise
Resource Planning (ERP) systems. These systems were motivated in part by the successes
achieved by Material Requirements Planning systems developed in the 1970s and 1980s, in
part by the desire to integrate the multiple databases that existed in almost all companies
and seldom talked to each other, and in part by concerns that existing systems might have
catastrophic failures as a result of not being able to handle the year 2000 date. In spite of
some significant problems in getting the ERP systems installed and working, by 2000 most
19
large companies had installed ERP systems. The result of this change to ERP systems was a
tremendous improvement in data availability and accuracy. The new ERP software also
dramatically increased recognition of the need for better planning and integration among
logistics components. The result was a new generation of “Advanced Planning and
Scheduling (APS)” software.

History of Supply Chain Management: Globalization and Supply Chains

The widespread recognition of the term “supply chain” has come primarily as a result of the
globalization of manufacturing since the mid 1990s, particularly the growth of
manufacturing in China. U.S. imports from China grew from about $45 billion per year in
1995 to more than $280 billion per year in 2006. The focus on globalization accented the
need for logistics strategies to deal with complex networks including multiple entities
spanning multiple countries with diverse control. There has been an increasing trend to use
the term supply chain management to refer to strategic issues and logistics to refer to
tactical and operational issues. This growing association of supply chain management with
strategy is reflected in the Council of Logistics Management’s changing its name to the
Council of Supply Chain Management Professionals in 2005. They make the distinction that
“Logistics is that part of the supply chain process that plans, implements, and controls the
efficient, effective forward and reverse flow and storage of goods, services, and related
information between the point of origin and the point of consumption in order to meet
customers’ requirements” while “Supply Chain Management is the systemic, strategic
coordination of the traditional business functions and the tactics across these business
functions within a particular company and across businesses within the supply chain for the
purposes of improving the long-term performance of the individual companies and the
supply chain as a whole.”

History of Supply Chain Management: The Future of Supply Chain and Logistics

Since the 1980s, computer technology has advanced at such a phenomenal rate that it is
currently far ahead of the ability of the supply and logistics field to adequately utilize the
new technologies. Given the extent of Internet usage today, it is hard to believe that
Microsoft’s Internet Explorer 1.0 was released in 1995. The communication capabilities
have fundamentally changed the way we think about communications and information
sharing. However, supply chain and logistics planning is still primarily based on the

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distributed models that came as the result of personal computers. There is no question that
academic research can enable a new generation of supply chain and logistics planning
technology based on centralized planning with distributed collaboration. These technology
advances can provide tremendous value in addressing traditional supply chain and logistics
areas such as warehousing and distribution, transportation, and manufacturing logistics.
However, there are also many non-traditional areas such as health care logistics and
humanitarian logistics which can get great value from building on the concepts and
technologies that have already proven successful in the traditional supply chain and logistics
areas. Finally, there are extremely valuable insights to be gained by systematically studying
the supply chain and logistics performance of companies across multiple industries and
countries.

2.7 Supply Chain Management – An Industry strategy & Technology

Rhonda R. Lummus, Robert J. Vokurka(1999), The definitions described and developed
earlier and recent industry collaborative activities indicate that supply chain management is
not a standalone process. Many supply chain efforts have fallen short of the potential
advantages because the term is often viewed as only relating to the supply side of the
business or to the purchasing function. As indicated above, supply chain management is
much more than just procurement. Among the misunderstanding evidenced, supply chain
management is not:
 Inventory management;
 Logistics management;
 Supplier partnerships;
 Driven from the supply side;
 A shipping strategy;
 Distribution management;
 The logistics pipeline;
 Procurement management;
 A computer system.

Despite the acceptance of the concept of managing the supply chain and partly due to the
limiting misunderstandings, growth of integrated supply chain management has been slow.
Reasons for the slow growth of integrated supply chain management include the following:
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  Lack of guidelines for creating alliances with supply chain partners.
 Failure to develop measures for monitoring alliances.
 Inability to broaden the supply chain vision beyond procurement or product
 Distribution to encompass larger business processes.
 Inability to integrate the company's internal procedures.
 Lack of trust inside and outside a company.
 Organizational resistance to the concept.
 Lack of buy-in by top managers.
 Lack of integrated information systems and electronic commerce linking
 Firms.

2.8 Linking the supply chain to the business strategy

The supply chain improvements described indicate that supply chain management has the
potential to improve a firm's competitiveness. Supply chain capability is as important to a
company's overall strategy as overall product strategy. Supply chain management
encourages management of processes across departments. By linking supply chain
objectives to company strategy, decisions can be made between competing demands on the
supply chain. Improvements in performance are driven by externally-based targets rather
than by internal department objectives. Managing the supply chain means managing across
traditional functional areas in the company and managing interactions external to the
company with both suppliers and customers. This cross-boundary nature of management
supports incorporating supply chain goals and capabilities in the strategic plan of the
company. This focus on integration can then lead to using the supply chain to obtain a
sustainable competitive advantage over competitors.
The impact of managing overall product demand and the supply of product will impact the
profitability of the company. The supply chain strategy can be viewed as the pattern of
decisions related to sourcing product, capacity planning, conversion of finished product,
deployment of finished product, demand management and communication, and delivery.
Linking supply chain strategy to the business strategy involves defining the key business
processes involved in producing a company's product or service. Rhonda R. Lummus,
Robert J. Vokurka(1999),
A company must develop objectives for the management of the supply chain based on
corporate objectives. From these higher level objectives, a set of detailed objectives can be
22
developed for each process within the supply chain. This cascading method serves to
integrate the supply chain processes with the overall enterprise direction and provides
measures for monitoring and execution. Supply chain management can be utilized to be a
point of differentiation for a company. Excellence on a certain dimension in product
position can provide a competitive marketing opportunity, but shortfalls in providing this
dimension by the supply chain can eliminate this advantage. For a company to be
competitive, it is not enough just to vary marketing programs. They must define a working
relationship with customers and put themselves in a position to deliver customer value. All
components of the supply chain must have the capability to meet strategic objectives.
Companies must evaluate the effectiveness of the supply chain strategy using a new set of
measures. Typical rewards aimed at improving performance of functions or departments
must be revised to strive to improve supply chain performance overall. By tying the supply
chain strategy to the overall company strategy, the objectives become process objectives
rather than functional objectives.
For example, traditionally, one of purchasing measurements is material cost or material
variance. Buying product at a lower cost is one way to improve that measure. Purchasing a
carton at a lower cost from a new vendor might lower the cost of the carton. However, the
new carton may not run as efficiently through the production process as the one from the
original supplier. Purchasing measure of material variance is favorable, but the
manufacturing facility is recognizing added costs in downtime, maintenance, etc.
Measurements must be designed to look across the supply chain and become process
objectives. The internal structure of the supply chain which often is causing as much
confusion/cost as external portions of the chain Included in that process.

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2.9 The Impact of Supply Chain Management on Performance
The literature of SCM was born on its practical positive impact on firm performance. Early
research used to report anecdotal evidence about firms that had ad-opted the supply chain
management approach and how this resulted in benefits for the firm and other supply chain
members. Great part of this literature was descriptive, reporting practices of successful
companies. The aim of a supply chain is to keep materials flowing from source to end-
customer (Harrison and Hoek, 2005). Good flow of material ensures products are delivered
to end customers on time or on schedule. Childer house, Lewis, Naim and Towill (2003)
found that management of a smooth material flow is a key factor in achieving superior
supply chain performance. A successful logistics network can reduce entire supply chain
costs, including manufacturing and procurement costs, inventory handling costs, facility
costs (fixed costs), labour cost and transportation costs (Simchi-Levi, Kaminisky and
Simchi- Levi, 2000).
Corporate culture is another compelling factor for SCM successfulness. Organisational
shared values in terms of extreme trust, commitment and collaboration, organisational
capability and top management supports are essential for an effective SCM (Mello and
Stank, 2005). Tony and Kelvin (2007) suggested that human factor is significantly affecting
the SCM effectiveness. The human factors affect management of various stage and process
in a supply chain as employees are the key asset to drive supply chain performance.
Additionally, measurement is very important and is the only approach to understand
whether process performance is improving or worsening and whether correction action is
needed urgently (Roussel and Cohen, 2005). Metric in performance measurement is a
number for measuring and reporting a key performance indicator for business, department,
team, product line and individual. Performance measurements metrics could be customer
satisfaction, product quality, delivery precision and cost reduction.

It is important to measure performance because it(Thoo Ai-Chin 2010):

 provides required direction and helps in setting priorities
 gauges and monitors progress
 focuses on key issues
 identifies areas acquiring attention for groups and individuals
 helps to communicate key issues and results
 measures and rewards people and teams

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 Chapter Three
Organizational Overview

25
3.1 Organization Overview of Aarong
Aarong – Bengali for ‘village fair’ – is Bangladesh’s most popular lifestyle retail chain.
This ethical brand began in 1978 as a humble means to empower rural artisans to rise above
poverty. Today, with 20 retail stores across Bangladesh and over 100 fashion and lifestyle
product lines, Aarong supports 65,000 artisans with fair terms of trade. Revolutionizing the
retail industry with high standards for quality and artistry, this iconic brand blends the
traditional with the contemporary in ways that never cease to win consumer appeal both at
home and abroad.
In 1976, when BRAC– the world’s largest development organization – engaged a small
number of rural women to produce crafts, their only buyers were a few scattered retailers in
Dhaka. Weeks, even months would pass between supply and payment, until BRAC
intervened and established Aarong to pay the rural women for their goods on time. Over the
past four decades, Aarong has carved out a unique market segment for handicrafts, reviving
Bangladesh’s rich heritage and impacting the lives of more than 325,000 people through
850 small entrepreneurs and the Ayesha Abed Foundation. The foundation acts as Aarong’s
production hub, where artisans find employment and access to BRAC’s holistic support
including, maternal health care, hygiene awareness and subsidized latrines, micro-credit,
legal aid, day care and education for their children.
From clay pots to diamond jewelry, and silk and cotton fabrics to brass and leather
merchandise, Aarong’s vast range of innovative products, backed by a robust supply chain
and distribution network, makes Aarong truly a household brand in Bangladesh. Its growing
presence outside of Bangladesh – through fair-trade networks and the online shop–
continues to broaden the market for Bangladeshi crafts globally, creating more opportunities
for artisans to protect their age-old art and livelihoods.

26
3.2 Vision, Mission, Objective & Values

Aarong has one outlet in London and exporting to other countries of

North America, Europe and some Asian countries. Because of
migrating Bangladeshis in those areas, they are targeting to make more
VISION franchising activities in those North American and European region.
They basically are targeting those activities after fulfillment the
customer demand in domestic market

Aarong’s mission is to help sustain rural craftsmanship and find a wider

MISSION market for their product nationally and internationally.

 Creating job opportunities

 Generating surplus for BRAC in order to minimize donor
dependency
OBJECTIVE  Ensuring long-term support and contribution toward the
S sustainability of BRAC’s development interventions such as
microfinance, education and skills development etc.
 Becoming viable investments in the long run in order to act as
„hedge against future liquidity

 Innovation that creates opportunities for the poor to lift

themselves out of poverty. We strive to display global
leadership in ground-breaking development initiatives.
 Integrity: Because transparency and accountability are the most
essential elements of our work ethic.
VALUES
 Inclusiveness to ensure that we engage, support and recognize
the value of all members of society, regardless of race, religion,
gender, nationality etc.
 Effectiveness in all our work, which constantly challenge
ourselves to perform better and to improve and deepend the
impact of our interventions

27
3.3 Naming Aarong
The name of the organization “Aarong” is a Bengali word. It means Village Fair. The
village fair provides craftsman of all trades a marketplace to display and sell their traditional
handicrafts. The naming of Aarong as such upholds the organizations commitment to
promote the indigenous goods of our country, which are a part of our rich culture and
artistic heritage. “AARONG” means: A: Active: we will execute our plans in an active
manner. A: Appealing: we will make ourselves and our workplace appealing. R: Reliable:
we will carry out our duties in a reliable manner. O: Outstanding: we will perform in an
outstanding manner. N: Novel: we will always look for novel creative ways of improving
everything we do G: Genuine: we will be genuine in our thoughts and actions.

3.4 Current Scenario of Aarong

Today, Aarong's reach has spread from where it started, Manikganj, to the rest of the
country. From a single shop, Aarong has grown into one of Bangladesh's biggest retail
chains offering one-stop shopping experience through 10 stores spread across the major
Metropolitan areas of the country - in Dhaka, Chittagong, Khulna and Sylhet and one in
London, UK. Aarong showcases over 100 product categories from clothing to household
items, gifts and fashion accessories to children’s toys, ethnic wear to beautiful crafts, from
silks, handloom cotton, Endito Terracotta, bamboo, jute and much more. Aarong also plays
the role of protector and promoter of traditional Bangladeshi products and designs. It houses
an extensive design library where remnants of our rich craft heritage, such as Nakshikantha
art and Jamdani patterns, have been widely researched and archived for present as well as
future use.

28
3.5 Products / Services Offering
Aarong is a leading fashion house in Bangladesh. Though it was born in need of helping the
disadvantaged, poor silk farmers of Manikganj, soon enough Aarong started to grow and
spread throughout the whole country, from one single shop to the biggest retail chains of
Bangladesh.
Besides, since 1984 this organization has export market. With growth, the product lines of
Aarong have also grown up.

29
At present Aarong have more than 100 product lines. The products of
Aarong are as follows:

Men’s Products Traditional, Executive Shirts, Maanja, Fotua, Short Kurta,

T-shirts, Stoles/Shawls, Sandals.
Women’s Products Traditional, Western, Nightwear, Shawls/Scarves, Shoes, Bags,
Fabrics.
Children Products Clothes, Toys, Books, Shoes.
Home Textile Products Bed, Table, Living, Kitchen, Kids, rugs, Fabrics.
Home Accessories Bed, Table, Living, Kitchen, Lamps.
Jewellery Products Gold, Silver, Pearl, Other.
Leather Products Shoes, Bags/wallets, Belts, Boxes, Photo Frames, Office.
Terracotta Products Decorative, Dining, Lamps, Plant Accessories.
Bamboo/Leaf Products Living, Dining.
Metal Products Decorative, Living, Lamps.
Candles Pillar, Floating, Decorative, Seasonal.
Jute Products Decorative, Personal Accessories.
Wood Products Decorative, Living, Table.
Glass Products Table.
NakshiKantha Decorative, Fashion, Table, Personal Accessories, Decorative,
Products Fashion, Bed.
Food Products Herbal Products.

30
3.6 Some Product Picture is given below:

31
32
 Managing Director
BRAC

Director
Aarong, AAF &
BDFP
3.7 Organizational Structure of Aarong

Human Resource
Design Studio Finance Department Retail Department
Department
Chapter - Four

System of Aarong
Logistic &
Marketing Social Compliance Maintenance
Export Department Department Department
Supply Chain Management

33
4.1 Aarong’s Supply Chain

Aarong’s supply chain is the movement of materials as they flow from their source to the
end customer. The whole supply chain of Aarong includes purchasing, manufacturing,
warehousing, transportation, customer service; demand planning, supply planning and
Supply Chain management. It is made up of the employees, activities, information and
resources involved in moving a product from Aarong’s supplier to its customer.

34
4.2 How Aarong Supply Chain Management System is build
Aarong’s supply chain management system is a group of things working together.
Computers, fax machines, data storage system, operating personals, procedures for the
employees and the most vital components of Aarong’s supply chain management system are
its telecommunication system. Cell phones helped Aarong to create a communication
network with every suppliers and transportation partners across the country. All this
components work together to provide information to collect products, manage the suppliers,
to provide services, create report etc. Different computer software’s are also used in the
supply chain management of Aarong but the main supply chain management software is
developed by Aarong. This software is used for both supply chain planning and to help
them to execute the supply chain steps. Aarong has hired trained professionals to operate its
supply chain management system and keep updating. Aarong’s supply chain management
system can be divided into two systems. Both of this system is vital for Aarong’s business.
1. Supply Chain Planning System and
2. Supply Chain Execution System.

Telecommunication
system

Operating
Computers Supply personals
Chain
Information
System

Data
Fax
Machines storage
system

35
4.3 Supply Chain Planning System

Supply chain planning

Customer
Supplier Source Stoke Store Sell Ship

Support Services

Aarong’s supply chain planning helps Aarong to create a model for its existing supply
chain, its helps management to measure demand forecasts for different products and
develop a way to find best source for meeting those demands and manufacturing plans.
Aarong have turned to their customers for help. By communicating directly with customers
about what they want and by getting their feedback on existing products, management are
able to more accurately understand the needs and wants of their target audiences. With this
information, they can make a forecast that reflects customer reality. Furthermore, improved
technology has of Aarong made it even easier to get their hands on customer feedback. The
Website of Aarong for example, makes it possible for organization to communicate with
customers in real-time, so they can then use the data immediately in their forecasts. Aarong
has developed a central database for all the information and it gives access to suppliers and
partners. These technology improvements along with real-time customer feedback have
made it possible to
more accurately predict
revenue, profit, and
sales in the near future. Supply Chain
More accurate planning Management
System
means that Aarong can
work together with their
vendors and distributors
Supply Chain Supply Chain
Planning System Execution System
36
to outline a plan that makes sense based on those forecasts so that no one is put into a
negative situation. Overall, supply chain planning is a critical component of Aarong’s
supply chain management. Without accurate planning abilities, businesses end up cutting
into their revenue unnecessarily and possibly putting vendors and distributors into difficult
situations that may strain the supply chain relationships in the long run.

37
4.4 Supply Chain Execution System
Aarong’s supply chain execution system is mainly consists of its transportation partners.
They manage the flow of products through distribution centers and warehouses to ensure
the products are delivered to the right locations in the most efficient manner. Aarong track
the physical status of goods, the Management of materials, warehouses, transportation
operations and financial information involving all parties.

38
4.5 Aarong’s Supply Chain Management Process

1. Planning: Aarong’s supply chain management planning starts at the top of the
management. Management tries to balance out the demand and supply to meet Aarong’s
sourcing, production, delivery and return requirements.
2. Sourcing: Aarong has large pool of sources to meets it supply. As the demand requires
suppliers come up with raw materials and goods. Then it creates a product which we can
exploit.
3. Making: Co-operatives comes up with final goods and they deliver them to the final
processing section of Aarong. The goods or products are ready to use for the customers.
4. Delivering: Aarong’s delivering process is managed by its own transportation. Aarong
directly distributes its product to the consumers. Their job is to distribute shipments
properly. “Just-in-time” is followed in delivery process.
5. Returning: Return process is consisting of product returns and post-delivery customer
support which is done by Aarong. Generally Aarong obtained their products to their
consumers within 30days.It’s also includes Aarong’s return process.
6. Logistics: Aarong’s top level management plans, supportive relation to their consumers
and control of all other factors that have an impact on the supply chain.

la n
P igP
la n
g
o g
L istcL
o tics o u
S rcinS
o g

rn n
etu
R r g in
in
ak
M g
e liv
D gD rin
ern g

39
4.6 Aarong’s Supply Chain Management Information Flow
Information flows from customers to Employee or from employees to operating personnel
in the information system. Then information goes to the floor manager. Floor manager
shows it to the consultants of Aarong. Consultant shows it to the top level management of
Aarong. Top level orders its suppliers to modify, improve or create product to meet the
customer demand.

40
4.7 Aarong’s Performance Improvements by Supply Chain Management

Performance improved Performance improved

Performance improved by
by supply chain by supply chain
supply chain management
management management

Accurate information Improvement in

for suppliers and Speed training
buyers employees

Improved product
Easily stored data & proper storage
and service
access system
quality

Information sharing Improved

through Upstream Report making customer
and Downstream become very easy satisfaction

Improved working Improved

Work Efficiencies communication
environment

41
4.8 Competitive Advantage of Aarong’s Supply Chain Management
System
Competitor analysis in marketing is an assessment of the strengths and weaknesses of
current and potential competitors. This analysis provides both an offensive and defensive
strategic context through which to identify opportunities and threats. Competitor profiling
coalesces all of the relevant sources of competitor analysis into one framework in the
support of efficient and effective strategy formulation, implementation, monitoring and
adjustment.
Aarong has its own version of the competitive analysis and its function is clear: to line up
your product with other products and show where yours falls short and where yours is
superior. Each industry brings a different spin to this old favorite and user experience
design has its own set of criteria by which to judge competitors.

42
4.9 Systems are currently used in Aarong

Systems are currently used in Aarong

Material Requirements Planning
(MRP)
15% 16% Manufacturing Resources
Planning (MRPII)
Enterprise Resource Planning
13% 12% (ERP)
Warehouse Management System
(WMS)
16% 15% Supply Chain Management (SCM)
Customer Relationships
Management (CRM)
14%
Supplier Relationships
Management (SRM)

4.10 Facing the problems below when using these systems

Facing the Problems Below When Using These Systems

16
12
8
4
Not at all
0
Little
Average
Greatly
A lot

43
 Chapter Five
Findings,
Recommendations &
Conclusion

44
5.1 Findings:
In this report I have figure out some of major findings which I have included bellow-

1. Aarong’s supply chain management system can exemplify into upstream portion
where the supply chain includes Aarong’s suppliers or co-operatives, and their
suppliers who are the raw material providers Aarong’s.

2. Employees lack expertise in IT and Supply chain process.

3. Lack of marketing policy, Aarong promote advertise only their website. For this
their campaign is getting less.

4. Aarong’s suppliers also have the concession to exchange register data. They are
aware of what Aarong wants and the price it’s willing to pay. They also get the cut-
off date and operational instruction from website.

5. Aarong has its own internal supply chain processes for transforming materials,
components, and services by their suppliers into finished products or intermediate
products for their customers and for managing materials and inventory.

45
5.2 Recommendations:
With multiple stores in Bangladesh, Aarong is a leader in super store retail organizations.
The combination of quality and price under various brand name offers customers value for
their money. We have examined and evaluated the operations of Aarong. We recommended
the following in to order to ensure continued success for the future of all Marks and Spencer
stores.

1. Strengthen existing resources: Aarong need to strengthen their product line by

adding complementary resources, and need to develop new resources. New product
can open new market for Aarong. Aarong can open more branches in foreign
countries.

2. Training on Supply Chain Management: Aarong must focus on train their

employees about Supply Chain, IT and Public Relationship.

3. Improve e-marketing policy: Aarong have their own website for promote and sell
their products. But it is not sufficient enough because technology changing every
day. More social media activities need to improve on regular basis.

4. Improve marketing efforts: Aarong marketing policy need to improve and upgrade
based on new era of marketing by building strong relationship with existing
customers. Because now all the big branded house focusing more on building a
strong relationship with their customers.

5. Improve the quality of the product: Aarong Need to give more focus on quality of
their products. In recent past we saw that quality of the product went down. So many
complain from customers about the product of Aarong. Negative word mouth
spreads on social media about Aarong. A large portion of customers switched to
different brand. To improve this situation Aarong need to focus on their product
quality.

46
5.3 Conclusion:

There is a reason why Aarong is at the forefront of the urban fashion-scene. Their
innovative clothing line fuses ethnic wear with global trends using traditional Bangladeshi
materials. Aarong is a support enterprise of BRAC. A significant portion of their earnings
are invested towards improving the socio-economic standards of disadvantaged artisans and
underprivileged rural women of various communities. Aarong organizational vision will be
achieved smoothly and that is the women will be empowered through “grass-root level
women entrepreneur development” and this empowerment will change the overall scenario
of economic condition.

47
References:

 https://www.coursehero.com/file/13132743/Supply-Chain-Management-system-of-
Aarong/
 https://assignmentpresentationedu.blogspot.com/2013/06/assignment-on-supply-
chain-management.html
 https://www.slideshare.net/MeghbarotaSmith/business-strategy-analysis-of-aarong
 https://www.scribd.com/doc/22804000/Assignment-on-Mannegement-Information-
Systems.
 https://www.researchgate.net/publication/268361779_Supply_Chain_Management_
Literature_Review_and_Some_Issues.

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