The basic idea for the Supply chain in the LPG industry of Bangladesh

1. PGD SCM
Material Management
Supply chain insights of LPG
Industry in Bangladesh

2. Team Group-06
1. Mohammmad Rakib Hossain, Executive-Project & Maintenance, Coca-Cola
2. Mehedi Hasan, Manager-Commercial, D & D Chemicals
3. Sujoya Hasan, DM-Procurement, BRAC
4. S M Saifuddin, Officer-Purchase, Shun ho BD Manufactory Ltd.
5. Kaiser Ahmmed, AM-Procurement, Akij Plastics, Akij Group.
6. MD. Abdul Wadud, Sr. AM-Commercial & Regulatory affairs, Edruc Ltd.
7. Mozahedul Islam, Executive-L&S Execution, A.P. Moller Maersk
8. Md. Rakib Miah, Executive-IE, Square Fashions Ltd.
Hello!
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3. Intro
 LPG stands for Liquid Petrolium Gas.
 In Bangladesh since 1978 by BPC.
 Currently in operation-19 companies & 4 more to come.
 On 2009 demand was-47000 Tones; currently 1M tones, will be
3.5M tones by 2030.
 95% LPG is imported
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4. Target Customer
◉ Household- Individual Home cylinder & Reticulated
system
◉ Commercial- 1. Hotels & Restaurants
2. Auto Gas
3. Industrial
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5. 1. LPG-As Raw material
o Sourced from Traders- Top 3 traders-
1. BB Energy
2. Shell Energy
3. Siam Energy
o International Price of LPG is almost same for
all traders.. Total price depends on-
1. Purchase volume per purchase
2. Freight Charge
3. Traders Commission
4. Negotiation
Sourcing & Purchasing
o LPG is purchased on CFR basis.
o Beximco LPG is bringing LPG by their own
vessel from traders.
o Purchase forecast depends on-
1. Sales forecast/Sales target
2. Minimum order quantity
3. Storing Capacity
o During raw material shortage/small amount
requirement, companies purchase LPG from other
competitor companies.
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6. o 2. LPG Cylinder
o Earlier all cylinder was imported from
foreign countries.
o Currently several companies produces LPG
cylinder on their own.
o Companies who are not producing
cylinder, they are purchasing from local
makers.
o We are exporting LPG cylinder also.
Sourcing & Purchasing
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7. Difficulties in Sourcing and
Purchasing 😒
 Bigger mother vessel (>5KMT) can’t
enter in our main storage zones of
LPG plants.
 Premium price has to be paid to traders
for smaller vessel as their time
chartering cost is high.
 For Business competition, cylinder is
being sold on 700-900 BDT, where
production cost is 2200-2400 BDT.
 Each cylinder’s consigned rate is three
times/year. It needs five years for
invested money recovering in
cylinder.
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8. Material/Inventory
Management
o LPG as raw material delivered at two
exclusives zones-
1. Mongla zone
2. Chittagong zone
o Received from jetty through pipeline to
their storage tank.
o Companies who doesn’t have their own
jetty uses other companies in exchange of
commission.
 Raw material Inventory is managed
considering three things-
1. Minimum and cost effective
purchase volume.
2. Demand forecast
3. Sales target
 Finished product (Filled LPG Cylinder)
inventory is only dependent on Sales
forecast/Sales target.
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9. Warehousing
◉ Raw material LPG is stored in Spherical giant
reservoir.
◉ 85% capacity of these reservoir can be used.
◉ Dept. of explosives protocol maintained strictly.
◉ LPG filled cylinder is kept under shade and well
ventilation is maintained.
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10. Transportation
o Three mode of transportation for LPG distribution-
1. Lighter vessel (< 5 KMT capacity):
◉ Used for transporting LPG to other satellite plant from main plant where vessel can reach.
◉ Cost effective and bulk amount of LPG can be transferred locally.
2. LPG road tanker:
 Used to transport to other satellite plant where vessel can’t reach
 LPG bulk cylinder refilling for fuel vehicle.
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11. Transportation
3. Truck:
 Used to transport filled cylinder to distributor and return used vacant cylinder.
 From Dept. of Explosives, certain rules is there for transportation-
◉ Vehicle must be licensed by Department of Explosives.
◉ Cylinders must be carried vertically.
◉ During cylinder transportation in Truck, for top layer of cylinders two-third height must be
supported by the side railing of truck.
◉ LPG cylinders cannot be transported through covered van.
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12. Interview
 Interviewed Mr. Rony Ilias, Sr. Executive-Supply chain, Omera LPG
Limited.
o Discussed about overall LPG industry situation.
o Omera is now in 2nd position in market in terms of cylinder number (28 lakhs) in
market, Just behind Bashundhara LPG (33Lakhs).
o If bigger mother vessel could enter, LPG retail price could have been dropped
drastically.
o Maintaining smooth distribution with one main plant, three satellite plants. Also
Three lighter vessels, 5 road tanker and few trucks are bringing acceleration.
o Exporting filled cylinder to India and LPG cylinder to Africa.
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13. Cash to Cash cycle
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14. Any questions ?
Thanks!
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