Bhaskar Forms & Agromills produces crude rice bran oil. The study aims to identify the best supplier using a vendor rating system and improve productivity. Currently, raw material testing takes 6 hours using a mini extractor. The study recommends replacing gunny bags and the mini extractor with bulkers, conveyors, and infrared spectroscopy for faster 2-minute analysis. This could reduce annual expenses by Rs. 97 lakhs and increase productivity by Rs. 30 lakhs annually. A vendor rating system would help identify the best performing suppliers.

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. *
*Need for the study
*Statement of the problem
*Objectives

3. *
*Shortage of Quality Raw Material
*Low Inventory
*Improper Storage and Handling
*Wastage of time in conventional lab
testing of inbound raw material.

4. *
The reason for the study is to
identify the best supplier by
developing a vendor rating system. To
find space for improvement and
alternate methodologies for improved
productivity.

5. *
1. To identify the best supplier by
designing a vendor rating system.
2. To capitalize on the available
resources.
3. To minimize losses
4. To increase the Productivity of the
overall system

6. Bhaskar Forms & Agromills (P) Ltd

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. Benefits of Rice Bran oil
1. Lowers your cholesterol
2. Toxin clearing Benefits
3. Anti oxidants
4. Oryzanol
5. Fried food absorbs less oil

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. *
*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. Sketch of Solvent extraction plant for Rice Bran oil

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. *
Conceptual Frame work is a guide
for 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. *
* 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. *
Cost Reduction by Time Reduction:
Process of increasing the
productivity by reducing the time
taken for different activities.
Cost Reduction by Methodology:
Identify methods to reduce
costs.

16. *
*All data taken for analysis are
secondary data from Organization
records.
* Details on plant processes are
collected through observation and
personal enquiry.

17. *
*All data taken for analysis are
secondary data from Organization
records.
* Details on plant processes are
collected through observation and
personal enquiry.

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. *
*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. *
2.Cost Benefit Study
Identify the Processes and methodologies
that reduce the profitability and replace them
with an alternative. . On such attribute is the
usage of gunny bags in the packing and handling
of rice bran because the cost of the bags are
also born by the buyer.

21. *
COST OF USING GUNNY BAGS
Cost of using Gunny bags per day for 10 loads with Rs.36,000
300 bags each
Cost of unloading per day for 10 loads Rs.5,000
Cost of estimated raw material loss due to Rs.2,000
handling at 20 kg/load/day
Total cost of using gunny bags per day Rs.43,000
Projected cost for 300 days/year Rs.1,29,00,000

22. *
Replace gunny bags with Bulkers

23. *
COST OF IMPLEMENTING NEW METTHODOLOGY
The above system can be replaced by
using bulker trucks and conveyors.
Cost of Conveyor systems Rs.5,00,000
Cost of building bulker on to 5 trucks Rs.25,00,000
Cost of maintenance per annum 1,00,000
Cost of operation per annum 1,00,000
Total cost of implementing new methodology 32,00,000
Cost saved by this new methodology 97,00,000

24. *
Pneumatic Conveyors Screw conveyors
Replace Human with conveyors for loading and
Unloading

25. 3. CURRENT INBOUND RAW MATERIAL TESTING
ANALYSIS ON A TIME SCALE
ACTIVITY TIME
(minuits)
1.Receive the inbound truck Logistics time
2.Weigh the truck of its contents 5
3.Record the detail of the truck 5
4.Take 10g sample from all bags 30
5.Mix the samples in a blender 5
6. Take 6 samples from the blender 5
7. Test 2 samples using Mini Extractor 360
8.Report the results to the supplier 5
9.Settlement of bills based on the lab test report 5

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. *
CALCULATION OF THE BENEFITS OF IMPLEMENTING INFRARED
SPECTROSCOPY
Reduction in demurrage and penalty per day =3,000*10= Rs.30,000
Annual savings on demurrage and penalty =Rs 90,00,000/Annum
Additional profit earned through increased = Rs
productivity 30,00,000/Annum
Thus from the above observations and analysis done by buying the
infrared spectroscopy is a valued option as it saves the plant
90,00,000 on demurrage alone

28. *
Mini Extractor Infrared Spectroscopy Analyzer
Replace Mini Extractor with Infrared spectroscopy
Analyzer

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. *
2. There are more than 1000 suppliers available
in the market as unorganized producers of Rice
Bran. We have to identify the supplier who can
supply the Rice Bran of Consistent Quality by
rating the Suppliers by designing a Vendor rating
system which rates the supplier based on the
quality of Rice Bran they deliver as
“EXCELENT”,”GOOD” and “TO IMPROVE”. These
ratings provide the company the status of the
suppliers.

31. *
Thus the Vendor rating system has
helped the Organization to identify the
non-performing suppliers and the
alternate technology for improved
Productivity and reduced costs.