Designing vendor rating for rice bran supplier

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Designing vendor rating for rice bran supplier

  1. 1. Bhaskar Forms & Agromills (P) Ltd., Madurai, T.N. Done by Guided by R.RAJASIMMAN Dr.T.NAMBIRAJAN (Reg No:11397080) Professor Department of Management Studies, School of Management , Pondicherry University, Puducherry - 605014
  2. 2. **Need for the study*Statement of the problem*Objectives
  3. 3. **Shortage of Quality Raw Material*Low Inventory*Improper Storage and Handling*Wastage of time in conventional lab testing of inbound raw material.
  4. 4. * The reason for the study is toidentify the best supplier bydeveloping a vendor rating system. Tofind space for improvement andalternate methodologies for improvedproductivity.
  5. 5. *1. To identify the best supplier by designing a vendor rating system.2. To capitalize on the available resources.3. To minimize losses4. To increase the Productivity of the overall system
  6. 6. Bhaskar Forms & Agromills (P) Ltd
  7. 7. **Established in the year 2010 as Bhaskar Forms & Agromills (P) Ltd. at Madurai, T.N.*Produces Crude Rice Bran oil*Employs 40*Production capacity is 300 tons of Crude Rice Bran oil and 1500 tons of De Oiled Bran(DOB) per day.
  8. 8. Benefits of Rice Bran oil1. Lowers your cholesterol2. Toxin clearing Benefits3. Anti oxidants4. Oryzanol5. Fried food absorbs less oil
  9. 9. **Is a part of the edible oil industry*There has been a significant gap between demand and supply of edible oil because of limited availability of oil seeds.* This gap has been met through imports, which account for almost 45- 50% of the total oil consumption
  10. 10. **The demand for rice bran oil is increasing on a faster phase.*Refined Edible oil produced and marketed by leaders in the industry Blend 80% of Rice Bran oil with other oils.*This gap has been met through imports, which account for almost 45- 50% of the total oil consumption
  11. 11. Sketch of Solvent extraction plant for Rice Bran oil
  12. 12. **Rice bran oil is extracted from rice bran by using food grade hexane as the solvent.*The solvent dissolves the oil from the rice bran as missela.*This missala is further processed to separate crude oil from hexane.*Crude oil is refined for domestic use.
  13. 13. * Conceptual Frame work is a guidefor the study.* Vendor Rating : Rating for a scale of 100 based on the following parameters:- * Quality rating= OC% + FFA% + W =>(70) * Where: OC % = Oil content in sample tested FFA % + Free Fatty Acid in sample tested W = Weight of bran supplied ans packaging
  14. 14. ** Cost Rating: competitive pricing and price stability. =>(20)* Delivery Rating: (ETD/ATD)(100/10) => 10 * Where ETD = Estimated time of delivery ATD = Actual time of Delivery* Overall Rating: Sum up all the above ratings
  15. 15. *Cost Reduction by Time Reduction: Process of increasing theproductivity by reducing the timetaken for different activities.Cost Reduction by Methodology: Identify methods to reducecosts.
  16. 16. **All data taken for analysis are secondary data from Organization records.* Details on plant processes are collected through observation and personal enquiry.
  17. 17. **All data taken for analysis are secondary data from Organization records.* Details on plant processes are collected through observation and personal enquiry.
  18. 18. *1. Result of Vendor Rating: Overall Vendor Rating 70% 60% 50% 40% 30% Overall Vendor 20% Rating 10% 0% Excellent Good To Improve
  19. 19. **From the above chart it is clear that the 60% of the suppliers are rated “GOOD”,20% is “TO IMPROVE” and 20% “EXCELLENT”.*The status of the vendors have to be monitored regularly and rating should be calculated.*The organization needs to find vendors with “EXCELLENT” vendor rating to have a better productivity.
  20. 20. *2.Cost Benefit Study Identify the Processes and methodologiesthat reduce the profitability and replace themwith an alternative. . On such attribute is theusage of gunny bags in the packing and handlingof rice bran because the cost of the bags arealso born by the buyer.
  21. 21. *COST OF USING GUNNY BAGSCost of using Gunny bags per day for 10 loads with Rs.36,000300 bags eachCost of unloading per day for 10 loads Rs.5,000Cost of estimated raw material loss due to Rs.2,000handling at 20 kg/load/dayTotal cost of using gunny bags per day Rs.43,000Projected cost for 300 days/year Rs.1,29,00,000
  22. 22. *Replace gunny bags with Bulkers
  23. 23. *COST OF IMPLEMENTING NEW METTHODOLOGY The above system can be replaced byusing bulker trucks and conveyors.Cost of Conveyor systems Rs.5,00,000Cost of building bulker on to 5 trucks Rs.25,00,000Cost of maintenance per annum 1,00,000Cost of operation per annum 1,00,000Total cost of implementing new methodology 32,00,000Cost saved by this new methodology 97,00,000
  24. 24. * Pneumatic Conveyors Screw conveyorsReplace Human with conveyors for loading and Unloading
  25. 25. 3. CURRENT INBOUND RAW MATERIAL TESTING ANALYSIS ON A TIME SCALE ACTIVITY TIME (minuits)1.Receive the inbound truck Logistics time2.Weigh the truck of its contents 53.Record the detail of the truck 54.Take 10g sample from all bags 305.Mix the samples in a blender 56. Take 6 samples from the blender 57. Test 2 samples using Mini Extractor 3608.Report the results to the supplier 59.Settlement of bills based on the lab test report 5
  26. 26. ** From the above time study it is clear that the sample testing takes 6 hours for determining the test results.* The Mini extractor can be replaced by infrared spectroscopy analyzer which determines the oil content in the sample within 2 minuets and the cost of installing on analyzer is Rs 12,00,00.* Due to the time taken for testing the logistics provider will charge demurrage for the trucks halt in the plant at Rs.1000/hour beyond 3 hours of halt at the plant.
  27. 27. *CALCULATION OF THE BENEFITS OF IMPLEMENTING INFRAREDSPECTROSCOPYReduction in demurrage and penalty per day =3,000*10= Rs.30,000Annual savings on demurrage and penalty =Rs 90,00,000/AnnumAdditional profit earned through increased = Rsproductivity 30,00,000/AnnumThus from the above observations and analysis done by buying theinfrared spectroscopy is a valued option as it saves the plant90,00,000 on demurrage alone
  28. 28. * Mini Extractor Infrared Spectroscopy AnalyzerReplace Mini Extractor with Infrared spectroscopy Analyzer
  29. 29. *1. The use of Gunny Bags and Mini Solvent Extractor for material handling and Quality testing have proven to be costly and extremely time consuming activities. By replacing the above with Bulker, Conveyor system and Infrared Spectroscopy for inbound Raw material testing can reduce the annual expenses of the Organization by Rs.97,00,000 and can gain annually by Rs.90,00,000 through increased productivity.
  30. 30. *2. There are more than 1000 suppliers availablein the market as unorganized producers of RiceBran. We have to identify the supplier who cansupply the Rice Bran of Consistent Quality byrating the Suppliers by designing a Vendor ratingsystem which rates the supplier based on thequality of Rice Bran they deliver as“EXCELENT”,”GOOD” and “TO IMPROVE”. Theseratings provide the company the status of thesuppliers.
  31. 31. * Thus the Vendor rating system hashelped the Organization to identify thenon-performing suppliers and thealternate technology for improvedProductivity and reduced costs.

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