2021 ISCEA PTAK PRIZE GLOBAL CASE

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Executive Summary
On January 23, 2020, authorities in China issued a lockdown for millions of people in Hubei
province and its capital Wuhan, as the number of fatalities due to a novel coronavirus started to
rise. This marked the first of many key developments in a global effort to contain the spread of
what was later named COVID-19, an infectious disease caused by a newly discovered
coronavirus.12 months later, the COVID-19 pandemic continues to upend social and human
interactions and cause a profound impact on complex, global supply chain networks. Waves of
localized outbreaks, regional or nationwide lockdowns, and ongoing disruption to supply and
demand alike still pose new and unprecedented challenges that organizations need to respond
to by adapting their business operations to keep supply chains running in across the world. The
supply chains of FMCG in Bangladesh are also affecetd by this disruptions. The disruptions are increase
of lead time, volatility of demand and supply, increase of price, and inaccuracy of forecasts etc. Due to
the lockdown, some routes for shipment are at halt now. As a result, supplies are not being delivered in
time. There’s short-term high spike in demand of commodities and essential products, the first moving
consumer goods (FMCG) industry is not equipped to meet unnatural growth in demand as such.
Moreover global supply chain disruptions causes raw material sourcing more challenging for most
FMCG manufacturers, leading to shortage of products and a potential surge in pricing.

Our practically actionable improvement suggestions for three (3) specifically mentioned areas in FMCG
manufacturing company in Bangladesh are described in below.
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Figure-1: Pandemic Planning and Covid-19 Readiness

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Improvement suggestions in material sourcing

For material sourcing in the FMCG industry, our country is extremely reliant on foreign countries.
Different countries are being quarantined at different periods due to the threat of a pandemic.In the
current pandemic situation it is difficult to source raw materials from abroad. Raw supplies take a long
time to arrive in the country because of late shipments and port congestion in different ports. As a
result, the FMCG industry of our country is unable to obtain raw materials from the foreign suppliers on
time. Because of this, manufacturing of many companies has badly impacted.

Three improvement opportunities of the sourcing that might be improved are as follows:

Start Multiple Sourcing from different countries : At the moment, all phases of the supply chain are
uncertain due to the pandemic. As a result, having different sourcing options reduces the risk of our raw
materials acquisitions.The Pandemic has showed us how dangerous it is to be reliant on a single country
for supplies. For example, the spread of covid-19 in China caused huge losses to many companies of
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many countries. To ensure business continuity we need to have multiple source in multiple countries

Figure-2: Contingent of respondents picked out a number of alternative markets

which also reduce dependency on a particular country.This necessitates a positive connection with all
providers.When sourcing is necessary, we may verify the suppliers and place orders to them. In this
scenario, we must choose a supplier that can fulfill our pricing, quality, dependability, flexibility, and
responsiveness requirements.

Impacts of multiple sourcing:

 It allows us to continue business without any major hamper, if for some reason one supplier
stops the delivery, there is an alternative source of supply.
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 When it comes to dealing with unexpected events, there is more flexibility in the supply chain.
 Allow us more bargaining power and ability to take advantage of economies of scale, which
lowers the costs.

Setting up regional supply hub or warehouse: If supplier have a regional office or warehouse in Asia
particularly in Singapore, Thailand or Sri Lanka then our FMCG companies will get shorten lead time.
Which also boost our working capital and reduce our holding cost as well. Moreover for any emergency
we can bring goods through air shipment where air freight cost will be signifacntly lower than from
US/Europe.

Impacts of sourcing from regional supply hub:

 Signifacntly improve the lead time (shorten lead time)

 Low inventory holding and carrying costs
 Faster support during any urgency
 Signifacntly reduce the financial cost related to LC and others bank interest

Local supply base Increase: During the coronavirus, FMGC were hit hard with the economic impact and
being cut off from their foreign suppliers. All of these factors will be forced FMGC to think about how to
save their business and support the local community of suppliers. Though we are overly reliant on
foreign sources, it will be highly beneficial if we have reliable supply base locally. It can reduce the risk of
supply significantly if we plan our forecast accurately even if tier-2 supplier based on China/Europe/US.
Though Working with local suppliers can be more expensive than outsourcing but FMGC get more
control and flexibility over the entire supply chain. The first point is to understand the capability of
suppliers that are local.If local companies do not have the capabilities required, they can be developed.
This is known as ‘supplier development’. There are two options available to businesses. Firstly, provide
technical assistance to suppliers to support their expansion and development of new capabilities.
Secondly, ‘encourage’ suppliers to merge with others in order to increase their ability to produce scale.
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Figure-3: Increase of shift for local supply base after post-pandemic

Impacts of Local supply base increase:

• Complete supply chain visibility with no hidden costs, as everything operates within an
accessible area.

• Reduced production and delivery risks.

• More control over inventory and stock, including control over costs.

• Ability to maintain profitable on-demand production without overstocking.

• It stands to reason that if sourcing locally increases bottom line, it would do the same for other
suppliers and manufacturers in our area, which can be a big boon to local economy and the
people who live there.

• sourcing locally benefit from working with companies in the same time zone, which leads to
easier and speedy communication. It also resolves problems faster and launch products to meet
consumer demands and spikes.

Improvement suggestions in manufacturing

Due to pandemic production rate has dropped dramatically in recent years. The manufacturing
process controlled this. Delays can occur at any level of the manufacturing process for a variety
of reasons. For example, worker attendance is poor, and many workers are impacted by Covid-
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19, forcing them to take a temporary leave. The impact of Covid 19 on manufacturing is

depicted in the diagram below:

Figure-4: Impact of Covid-19 on Manufacturing.

But the production rate of foreign industries is better than Bangladesh because other countries
have automated or semi-automated manufacturing processes. In our country, there are some
FMCG industry is being automated their manufacturing process as well. But automation is not a
blessing for our country which may lead to create unemployment. The competitive advantage
of cheap labor like ours is not available in many other countries.

So, taking into account the whole manufacturing process of the current circumstance, the three
manufacturing process improvements are as follows:

Portfolio optimization: It is necessary to identify the products/SKUs from which maximum

profit is generated. During pandemic when managing stocks of huge variants is a mammoth
challenge, better we can focus on products or SKUs which have significant contributions in the
bottom line.

Impacts of portfolio optimization:

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 Profit maximization at the lowest possible total cost in the supply chain
 Product return and product damages will be much lesser
 Less inventory holding costs leads helthier bottom line

Commonality in manufacturing: Commanility is a manufacturing method in which common

components are replaced with different ones throughout the production of a product/SKU.
Alternatively, utilize the same component for several sorts of components. This process saves
money and time in the production process. For this, the common elements have to be
separated. Then they have to be used in the products in which these common elements can be
used. We should refrain from using common products unnecessarily. Effects of applying
commonality in manufacturing via a diagram is given below:

Figure-5: Effects of Commonality

Impacts of applying commonality in manufacturing:

 Reduce inventory level.

 Reduce the cost of the safety stock of the manufacturer.
 It reduces holding and setup costs.
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 Manufacturing lead time will reduce.

Setting up multiple plants in different geographic location: Normally many FMCG companies
have multiple plants, warehouses in Bangladesh. Which leads continuous production and
supply at another plant even if any specific division or district shuts down. As we are witnessing
that many countries posing lockdown region wise. For example if a FMCG company can set up
their plant in the industrial area near the port, it will allow them to avoid many risks to carry the
goods easily and will allow faster time to market even if lockdown poses during this area. A
multi-plant model is shown below:

Figure-6: Multi-Plant Model

Impacts of setting up multiple plants:

 It will be possible to take resources in the industries near the port at the fastest time.
 It's less probable that production will stop.

Improvement suggestions in Distribution

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Fastest delivery is crucial in the distribution of fast-moving consumer goods. This is due to the
fact that the life cycle of fast-moving consumer goods is shorter, and customer demand is
likewise higher. As a result of these two factors, such products must be distributed as soon as
possible after production. To distribute swiftly, some strategies must be followed. For
distributing fast-moving consumer goods in fastest way the steps are given below:

Cloud Distribution: We can keep track of the warehouse or retailer's inventory by following this
procedure. The manufacturer will be able to keep track of the inventory of the warehouses or
retailer invenotry and then the manufacturer will deliver the required number of product to the
warehouses or retailer shop. The logistics location information will also be visible to the retailer
or warehouse manager. It integrates the entire supply chain of FMCG.

Figure-7: Cloud Supply Chain

Impacts of cloud distribution:

 Less safety stock required.

 Supply chain will efficient.
 Low backorder.
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Omnichannel distribution: FMCG company needs to think of their omnichannel distribution

strategy from both a customer purchase and possible customer return, which are often referred
to as forward and backward distribution services. Omnichannel distribution is a system that
enables customers to complete a purchase and receives orders from any channel they choose.
Customer service is the beginning, middle, and end of omnichannel strategies. Retailers
must align inventory placement, its physical location, with demand.
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Figure-8: Omnichannel Trends

Impacts of Omnichannel Distribution:

 Customers have better access to products

 More flexibility saves time
 the brand loyalty increases

Small decentralized warehouse setup:

Some decentralized small-scale warehouses for FMGC businesses must be established across the
country. The key benefit of a decentralized warehouse is that it takes less time to deliver and costs less
to transport. It also has a high level of delivery flexibility. The criteria for location selection of small
decentralized warehouses are given below:

1. Rent Rates & Taxes.

2. Markets & Local Environment Factors.
3. Warehouses are must be in a location that can cover the customers of the maximum grocery
shop or retailer shop.

Impacts of Small Decentralized Warehouse setup:

 Low Transportation cost

 Fast delivery
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Conclusion
One element from our study is clear that in the modern era of global competition, the
companies that will succeed and continue to lead will be those that have a strong pandemic
plan or business conitinuity plan within the context of a dynamic and integrated supply chain.
This business continuity plan must adhere the perspective described throught the case covering
all areas of demand and supply planning, material sourcing, manufacturing, distribution and
logistic management. Automation of supply chain processes and new technologies also play a
huge impact in coming days. In today's situation, most of the companies work in offline the
supplies services industry but it is no doubt that nearly every FMCG will involve digital because
of the digitalization trend in each industry.