ARMY INSTITUTE OF BUSINESS ADMINISTRATION

Marico Bangladesh
Operation Management

Group Members
Nushrat Haider Chaudhury (10518002)
Faiza Rabbi Khan (10518005)
Maisha Nihal Ahmed (10518032)
Nurul Ishrak Mahir (10518033)
Rafsan Ahmed Raj (10518046)

Submitted To: Md. Mahfuzur Rahman

Date: 16th November 2020

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 Abstract
The paper demonstrates the different aspect of the operation management of Marico Bangladesh.
Analysis has been conducted depending upon the hair oil products of Marico Bangladesh,
specifically Parachute Coconut Oil. Firstly, the paper demonstrates the business level strategy of
the hair oil portfolio of the company. Secondly. Analysis has been conducted on the distinctive
competency of Parachute Coconut Oil as it is the market leader amongst the hair oil industry.
Thirdly, three methods of forecast have been used to forecast the revenue of Parachute Coconut
Oil for fiscal year 2020-2021. Moreover, the overall operation management, location suggestion
for expansion, quality control and inventory management has also been analyzed.

Table of Contents
Introduction......................................................................................................................................1
Business level Strategy....................................................................................................................2
Distinctive Competency...................................................................................................................4
Forecast of Revenue of Parachute Coconut Oil...............................................................................5
Naive Approach...........................................................................................................................5
Five-period Moving Average.......................................................................................................6
Linear Trend Line Equation.........................................................................................................6
Operation Function..........................................................................................................................8
Parachute Coconut Oil’s Operational Function...........................................................................8
Input..........................................................................................................................................8
Transformation.........................................................................................................................9
Output.......................................................................................................................................9
Location Decision............................................................................................................................9
Major Highlights of the location................................................................................................10
Key Site Facts............................................................................................................................10
Quality Control..............................................................................................................................11
Inventory Management system......................................................................................................13
References......................................................................................................................................16
Introduction
Marico Limited is a leading Indian consumer products company in the global beauty and
wellness space. At present, it has an emerging market across 25 countries including India,
Bangladesh, Egypt, Middle East, South Africa Vietnam and Malaysia. It has multiple brands in
the category of hair care, skin care, edible oils, health foods, male grooming, and fabric care. The
brands that the Marico launched in India are as Parachute, Parachute Advansed, Saffola, Hair &
Care, Nihar, Nihar Naturals, Livon, Set Wet, Mediker and Revive. Whereas, the brands launched
some unique brands internationally are Parachute, HairCode, Fiancée, Caivil, Hercules, Black
Chic, Isoplus, Code 10, Ingwe, X-Men and Thuan Phat[ CITATION Mar \l 1033 ].

In 1999, Marico thought of expansion and entered the emerging market of Bangladesh. It started
its operations in 2000 and 10 years later in 2009 they made a public offering of equity in
Bangladesh which was also their first overseas subsidiaries. Since then, Marico in Bangladesh is
known as MBL. It was the first subsidiary of Marico Limited and has maintained a most
profitable unit of Marico’s international business. At present is has 29 brands and 152 SKU
(Stock keeping units)[ CITATION Ann201 \l 1033 ] It is amongst the top 3 FMCG (Fast Moving
Consumer Goods) Multinational corporation. The brand has been amongst top 10 most trusted
brands continuously since 2009. According to the fiscal year 2019, MBL has experienced a

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revenue growth of 12.2% and profit growth of 23.2%. Amongst the total revenue of MBL, 70%
comes from Parachute coconut oil[ CITATION Mar201 \l 1033 ].

Source: [ CITATION Mar201 \l 1033 ]

Business level Strategy

Marico has cornered the market with its excellent business strategy since the beginning. Marico
is always innovative in terms of launching new products. It follows differentiation strategy to
stand out of crowd and it has successfully implemented it. It has showed innovation in all it’s
brands but has specifically shown wide range of innovations in their hair oil segment. Here are
some points that highlights the use of differentiation strategy of MBL.

 It has a well-established distribution network throughout the country that makes it

available to customers compared to all other competitors. This helps the customers to
purchase Marico’s product from their closest retail stores.
 With extension of market Marico focused on digital initiatives to be more engaged with
consumers. It has built data analytics and through its commerce it is driving its sales.
They have taken the initiative to increase their personal relations with customers by
engaging more with their customers compared to their competitors through several
Facebook pages, Instagram pages along with various TVC and billboards.
 Marico focuses cost management to be sustainable in the market. Every product of
Marico has its unique quality which makes it special in comparison with its competitors.
Marico brings exception in its every product by creating differentiated product offerings.
The brand has been one of the top trusted brands continuously by adding value to
people's life through its product. Few examples are given bellow-
o Parachute hair oil tends for deep nourishment, beautiful hair, reduce hair fall. It
has the goodness of coconut oil that penetrates up to 3 layers of hair. The quality
of this product has been able to stand amongst the crowd and has resulted in
creating a loyal customer base for the company
o Parachute advanced hair perfect - has pro - vitamin B5 which makes hair shiny
soft and healthy. This product has the goodness of 5 vitamins which is available
in a single product.
o Nihar Anti Hair fall 5 seeds hair oil has a combination of methi, sason, kalonji,
launki and til. It comes with a hair oil cap that soaks active seeds with coconut oil
and increases the strength of the oil. This hair product adds value through the
innovation in their unique packaging with extra added vitamins for hair.
o Parachute Advanced Hair Oil Anti Hair fall comes with a root applier to help with
easy application of the oil for the customers. It makes hair thick, smooth, shiny
with visible reduction and nourishes the hair. Marico has a wide range of product
line which has been continuously satisfying its customers.

As stated above all of its product comes with its own identity and specialty to serve
it's valuable customers. They have successfully implemented their strategy as they
have the largest market share.
Distinctive Competency
The profit of Marico Bangladesh increased 30% to Tk 264 crore in the fiscal year 2020 as the
flagship product of Marico, Parachute coconut oil continues to rule the heart of the customers.
[ CITATION Mar20 \l 1033 ]. It has also captured the highest market share in the branded coconut
oil category. The availability of the parachute coconut oil along with 4 different variants with
different options open for customers and making it affordable for all.

 Marico incorporates extraordinary distribution network reaching out to 700000 + retail

outlets. So, parachute can be found in any corner of the country. According to MBL, it
reaches to 4 out of 5 households in Bangladesh.
 Parachute has tremendous loyalty in rural and urban areas of Bangladesh. Because if
staying in the local market for years, it has gained trust and equity of every passing
generation. This brand portrayed itself as pure coconut oil through its packaging and
promotions. Research says, eight out of 10 Bangladeshi uses parachute on regular basis.
 It has always been innovative with its marketing and advertising related to every passing
generation. Parachute has become a sustainable brand through word of mouth. Over the
years from generation to generations neighbors to neighbors’ people has been sharing
goodwill about word of mouth
 Parachute is a market leader amongst the hair oils industry with an 80% market share. It
has also the advantage of early entry in the market.
Source: Dhaka Tribune[ CITATION Nia20 \l 1033 ]

Forecast of Revenue of Parachute Coconut Oil

According to the annual report of MBL 2015 - 2020, the following table demonstrates the
revenue data of the Parachute Coconut Oil from the fiscal year 2015-2016 to 2019-2020, which
are as follows:

Year Revenue (In Billion)

2015 - 2016 Tk. 5,630,387,454
2016 - 2017 Tk. 5,345,714,157
2017 - 2018 Tk. 5,808,522,439
2018 - 2019 Tk. 6,053,556,498
2019 - 2020 Tk. 6,363,063,211

Naive Approach
According to the naïve approach, the forecast for the revenue of Parachute Coconut Oil
2020-2021 fiscal year is Tk. 6,363,063,211 billion

Five-period Moving Average

The calculation for the five-period moving average is as follows:

5630387454+5345714457+5808522439+6053556498+6363063211
¿
5

¿ Tk.5,840,248,752 billion

Linear Trend Line Equation

The follow table demonstrates the calculation for the forecast of revenue in BDT crore:

Time period (t) Revenue (Y) tY t2

(BDT Crore)
1 563.04 563.04 1
2 534.57 1069.14 4
3 580.85 1742.55 9
4 605.36 2421.44 16
5 636.31 3181.55 25
∑ t=15 ∑ Y =2920.13 ∑ tY =8977.72 ∑ t 2=55
Here,

n ∑ tY −∑ t ∑ Y
b=
n ∑ t 2−¿ ¿

5 × 8977.72−( 15× 2920.13)

b=
5 ×55−¿ ¿

b=21.733

Now,

a=
∑ Y −b ∑ t
n

2920.13−(21.733× 15)
a=
5

a=518.827

Therefore,

Y = a + bt,

Y = 518.827 + 21.733t

Y6 = 518.827 + 21.733(6)

Y6 = 649.225 crore
 L inear Trend L ine Graph
700
649.23
650 636.31
f(x) = 21.73 x + 518.83
Revenue (In Crore)
605.36
600 R² = 0.86 580.85
563.04
550 534.57

500

450

400
1 2 3 4 5 6
Period

Operation Function
Operations management performs a transformation role in the process of converting inputs such
as raw materials into finished goods and services. These inputs include human resources, such as
workers, staff, and managers; facilities and processes, such as buildings and equipment; they also
include materials, technology, and information.
Parachute is the epitome of "purity" and "quality" in Bangladesh. It is made from finest coconuts
in automated machines, Parachute Coconut Oil is the top most branded coconut oil market of the
country. The availability of it now is with the newest avatar in the blue bottle.

There are mainly three steps done in order to make the operations done for
Parachute oil.

1.Input 2. Transformation (processing) 3. Output

Parachute Coconut Oil’s Operational Function

Parachute coconut hair oil is made from fresh coconut keeping in mind the
special need of hair. It penetrates the hair roots better than other hair oils that
strengthen hair and makes it look nourished and healthy.

Input
Copra (the dried meat of the coconut) is the prime raw material for Parachute hair oil. At present,
it is imported from India, Sri Lanka and Indonesia. After the coconut is reached into the factory,
the coconuts are checked properly in order to maintain the freshness and purity and are collected
in the scientific way.

There are 275 members directly employed and 2750+ people are employed in the form of
distributors, sales man and local suppliers. 99% of the human resource is local talent.

The company has two factories, both are located in Gazipur district. One is located in Mouchak
and the other is located in Shirirchala. Parachute Coconut Oil is produced in Shirirchala factory.
However, they also outsource to manufacture products using 3 manufacturing
contracts[ CITATION Ann201 \l 1033 ].The company uses real time order and movement tracking
for the smooth payment to its business partners[ CITATION Ann19 \l 1033 ].

Transformation
Without any touch of hand coconuts are reached to the transformation destination through the
conveyor belt. By the help of modern technology, the coconuts are broken into pieces in order to
transform into oil. Full transformations are computerized from the control room of Parachute
Hair oil factory. After every 15 minutes the asset value, colour, smell of oil is tested by the
specialists. Oil is stored with nitrogen to maintain hygiene and pure. Before coming into the
filling line, lastly the packaging is tested.[ CITATION Fac19 \l 1033 ] To maintain quality bottle and
cap are checked and finally oil gets into an attractive blue bottle and gets a stylish packaging
available in 4 variants which are 50ml,200ml, 300ml 500ml.

Output
After the transformation Parachute hair oil is ready to deliver all over the country through boxes.
The company transfer it’s finished goods to four regional depots, located in Chittagong, Comilla,
Jessore and Bogra. The company has their own distribution channel. The product is distributed to
700000+ retail outlet across the country. The distribution of Parachute Hair oil is done on the
basis of reaching target customers within channels in every market place. Every sales officer of
the warehouse covers number of areas to distribute the products to the distributor. Creating an
effective network all over the country is one of the main function of distributors to ensure the
target market and availability. Thus, by following this way Parachute hair oil reaches to their
customers.

Location Decision
The demand of the Parachute Coconut oil is increasing day by day. So, to fulfill the customer
demand Marico Bangladesh can open a factory under Bangladesh Economic Zones Authority
(BEZA) Mirsorai, Chittagong. This place is a government economic site. Chittagong is the
coastal region of Bangladesh. Being the coastal area, there is plenty of availability of coconut
there. The changes price of the Copra and its shortage of it is a risk factor for the company. So, if
the plant is situated in Chittagong then the company will be able to source it prime raw material
easily when required at present and even in the near future. Moreover, the demand for the
coconut oil is also high in the coastal area of Bangladesh.

Why Bangabandhu Sheikh Mujib Shilpa Nagar?

 Direct access to waterways

 Well connected with national highways
  Chittagong Sea and Air port only 67KM from the site
 Attractive of foreign investors
 Availability of hassle-free land
 Comprehensive government initiative to ensure gas, electricity, sweet water, access road,
railways and sea port.
 Potential Industrial Hub of Bangladesh

Major Highlights of the location

 Fully government-owned
 Near to Chittagong port
 Vacant land, easy to initiate
 Offsite utility provisions
 Great potential for expansion

Key Site Facts

Criteria Facts
Location Mirsarai
Size (acre) 30000
Ownership Government
Connectivity Well connected
Mirershorai Seaside
Labor Source Mixed
Closets Port Chittagong

At present, Marico Bangladesh is following general-purpose plant strategy. They have two
factories located in Gazipur. One factory is mainly used for Parachute coconut oil and other hair
products. The other factory is being used for rest of the product line. The facilities at present are
quite flexible so they manufacture products according to the requirement. However, as the
demand for both the hair nourishment and non-hair nourishment products are increasing, we can
suggest the company to follow the product plant-strategy, where there will be facilities for
different product lines.
Quality Control
Improving product quality is one of the most important things for achieving long term sales
growth and profitability. So, in order to improve product quality to be more competitive in the
market Marico Bangladesh follows some quality practices in their routine processes and these
are:

 Marico Bangladesh invests heavily on research and development activity which are
supported by a strong dedicated team of 54 personnel, who are constantly making effort
to ensure that every product being developed meets the highest standard of quality.
 Dedicated Quality assurance team is placed at Factory to ensure robust compliance of
Quality parameters. At each steps of manufacturing – from Raw & Packaging material
receipt to final finished goods, Quality parameter compliance is ensured properly so that
there is no mismatch on the finished goods specification versus the desired set value.
 They are certified level 1 quality and EHS (Environment, Health and Safety) Auditor at
GSK Bangladesh Ltd[ CITATION Ann201 \l 1033 ].
 As Marico Bangladesh is a customer goods company the safety and quality of their
product is their top most priority. They have established well-defined system and
processes to ensure compliance to regulatory requirements.
 Ensures in process quality parameters are maintained to avoid any deviation and OOS
(Out of Specification) at every stage of operation maximum capacity and produce high
quality products.
 Ensure and maintain unit quality processes through Deviation handling, CAPA
(Corrective Action and Preventive Action), Rejection investigating through six steps
RCA (Root Cause Analysis), management of change through CC (Change control).
 Quality week is another signature initiative in their manufacturing facilities to reinforce
their awareness and find avenues for improving their quality control processes to deliver
sage and quality products to consumers.
 They are committed to use safe and sustainable ingredients to their products and
packaging follow a stringent ingredient assessment policy for all their products. To
ensure more quality maximum of their raw materials especially copra (dried section of
 the meat of the coconut) is imported from India, Sri Lanka and Indonesia[ CITATION CRE09
\l 1033 ].
 Their ingredient assessment are in line with the prohibitions, restrictions and safety limits
for individual ingredients from external databases such as Personal Care Products
Council (PCPC) and European Economic Community (EEC)’s Cosmetic Ingredient and
Substances (Costing) database.
 They have a clear assessment of the health and safety effects of their products at each
stage in the value chain. All their products are tested in accordance with the applicable
regulations at laboratories conforming to ISO/IEC 17025 and are certified by National
Accreditation Board for testing and Calibration (NABL).
 Their depots and warehouses are covered under unique certification program and
distributors are covered under “Distribution Food Safety program”.
 They monitor their production line and does periodic quality control checks.
 In production department they make their employees work together to discuss solutions
to quality issues, in order to have a faster result/solution.
 Maintains strong working relationship with all the stakeholders to meet the quality issues.
 Creates production plan for new products to guarantee quality from stage one.
 They audit materials provided by suppliers to assure quality before incorporation into the
product.
 Handles market complains and reduction of defect at every stage of operation by proper
risk assessment and implements risk mitigation plan as per QMS and HACCP
requirement[ CITATION Jah18 \l 1033 ].
 Assess the products quality by testing for a range of features and seeing how the product
performs under stresses like impact, temperature, humidity, etc.
 Investigates causes of quality problems and proposing solutions and providing training
for new employees on quality control.
 Provides necessary supervision during the establishment of packaging lab project. The
managers have to prepare all necessary audit documents and present them in every 2
months.
  And lastly Marico Bangladesh establishes quality control for 120MT coconut for
crushing purpose and 70MT oil per day.

Inventory Management system

It is the most important part of a business because it saves the money and allows Marico
Bangladesh to fulfill their customers' needs. In other words, it enables successful cost control of
operations. The primary role of an inventory system is to track their products and supplies. An
effective system keeps records of when they purchased inventory, when they sold it and how
much they have on hand.

Source: MBL Annual Report 2019-2020[ CITATION Ann201 \l 1033 ]

According to one of the employees of MBL, Marico has different practices for its inventory
management through which they have effectively managed their inventory till now. The
practices are as follows:

 A system keeps track of Inventory:

Raw material, Packaging Material, Semi & Finished Goods – all are tracked in the ERP
(Enterprise Resource Planning) software called SAP. In the SAP, all stock status of the
input & output materials is listed and from the software, further decisions on purchases,
productions are taken place.
 A reliable forecast of Demand:
At the SAP, demand planning tools are mapped which take data from existing Finished
Goods stock movement, Raw & Packaging material replenishment patter etc. Demand
planning is based on Immediate, Short Term and Long-term approach.
Also, apart from system tracking, monthly planning meeting is held between Planning,
marketing & Sales team where consensus demand planning & Forecasting are agreed
between these cross functional teams.

 Knowledge of Lead time & Lead time variability:

Lead time for particular Raw, Packaging, imported Finished Goods are maintained
properly at the Procurement end. For each material, respective Lead time is also mapped
at SAP software from there, planning team can identify the ordering cycle for each
material before getting stock out for the particular material.
Also due to various reasons (Supply break down, transport unavailability, Political
reasons, Material feedstock issues, Price variations), Lead time variability is also seen for
some raw materials. Considering this, Safety stock is maintained for each material to
avoid the unforeseen issues of material availability.

 Inventory classification
Here broadly ABC classifications are followed:
- The 20% of SKUs that contribute to 80% of revenue
- The 30% of SKUs that contribute to 15% of revenue. 
- The 50% of SKUs that contribute to 5% of revenue
 Inventory Management for Parachute Oil:
Raw Material: For Parachute oil, most of the RMs ae being imported from outside
country and usual Lead time for the Raw material is 50/60 days. Considering this lead
time, around 2-month equivalent safety stock of raw materials is kept at raw material
warehouse.
Packaging Material: Packaging materials are mostly taken from local vendor and hence
lead time also shorter. Considering this, for packaging items, there is no big inventory is
maintained. Only for Packaging materials resins (which are used at Bottle), these are
imported from outside and these resins are bought in bulk for 5/6 months coverage and
kept at warehouse accordingly.
Finished Goods: Since Parachute oil is fast moving items, hence for finished goods,
there are no big inventories to be maintained. Basis on the sales trend, Market demand,
production plan is scheduled and finished goods dispatch are maintained accordingly.
 Marico Bangladesh now uses vendor managed inventory (VMI) where they would
replenish the stocks on the basis of distributor’s online input of stocks to the retailers.
 They also used perpetual system which keeps track of their inventory balances
continuously, with updates made automatically whenever a product is received or sold.
References
(2019). Annual Report. Dhaka: Marico Bangladesh.
(2020). Annual Report. Dhaka: Marico Bangladesh.
(2009). CREDIT RATING REPORT. Dhaka: Marico Bangladesh.
Factory Process AV for Marico Bangladesh. (2019, March 11). Retrieved from Youtube:
https://www.youtube.com/watch?
v=ZvjDRuxJ1g0&feature=youtu.be&fbclid=IwAR1wrJFBrh1ncM2wICF4IYjkrLZ1nzB
uTN_Rid_w2u8jGDrlvyyq2HqV3cE&ab_channel=PurplebotDigital
JahidHassan. (2018, February 17). MGT 314 Group Project Marico BD Group 2 (1). Retrieved
from SCRIBD: https://www.scribd.com/document/371710301/MGT-314-Group-Project-
Marico-BD-Group-2-1
Mahmud, N. (2020, August 29). Foreign brands dominate hair oil market. Retrieved from
Dhaka Tribune: https://www.dhakatribune.com/author/Niaz%20Mahmud
Marico. (n.d.). Retrieved from Emerging business striving to make a difference.:
https://marico.com/india/about-us/overview
Marico Bangladesh staying ahead of the curve. (2020, February 03). Retrieved from The Daily
Star: https://www.thedailystar.net/business/news/marico-bangladesh-staying-ahead-the-
curve-1862839
Marico minting the popularity of its Parachute Coconut Oil. (2020, May 19). Retrieved from
Daily Star: https://www.thedailystar.net/business/news/marico-minting-the-popularity-
its-parachute-coconut-oil-1903876