scm-450 2
scm-450 2
Group 1
Report on Hi tech steel & Re-rolling mills Ltd
Name ID
Nafisa Kauser 1712155030
Toybur Rahman Niloy 1713015030
Mushfiqur Rahman 1912743030
Nasif Zuhayer Auritro 1913023630
Nusrat Naila Nokshi 1831693630
Rashedul Islam Sifat 1811612030
Acknowledgement
First of all, we would like to thank almighty Allah and express our gratitude for all those who have
tried to help us with their continuous support, sharing information, and providing knowledge directly
and indirectly to complete our project.
We would also like to express our gratitude to our honorable faculty, Mr. Mofassel Hossain, for his
continuous support, motivation, supervision, and immense knowledge. Besides this, we all are
grateful because finally, we finished our course Management 450 (global procurement) project
assignment within a time given by our instructor. This project has been a good learning experience
for our group as we got the opportunity to learn a lot about the deformed bar industry's import
process. This would not have been possible without our group members' cooperativeness for the
preparation of this report. It gave us immense pleasure to be able to complete this project
successfully.
Finally, we would like to sincerely thank our lecturer Md. Mofassel Hossain, Department of
Management, North South University, for the guidance and encouragement in finishing this project.
This has been a good learning experience for our group. We got the opportunity to research with
some reputable persons and learn a lot about the Global Procurement of Supply Chain Management.
Sincerely,
Group 1
Nusrat Naila Nokshi 1831693630
Nasif Zuhayer Auritro 1913023630
Mushfiqur Rahman 1912743630
Nafisa Kauser 1712155030
Toybur Rahman Niloy 1713015030
Rashedul Islam Sifat 1811612030
Executive Summary
In today's competitive and developing corporate world, the concept of "global sourcing and
procurement" has become extremely popular and is being used widely. This project was formed
regarding supply chain management strategies as well as procurement procedures of the deformed
bar industry by through data collection, research and exploration. We finished this assignment under
the rigorous guidance and instruction of Mofassel Hossain, sir, lecturer at North South University's
School of Business and Economics' Department of Management. In this brief project, the
participants explored the market, discussed with a several specialists and assistance, gathered data
and information from the internet and from certain company that is currently functioning in the real
market and finally developed hypotheses based on the collected real life data. The project will
concentrate on worldwide finding and procurement functions for deformed bars imports. To finish
this project, we will concentrate on market analysis, solicitations, integration of new technologies,
particularly procuring, sourcing, and information, as well as relationships with suppliers. We hope to
make this initiative a success by ensuring sufficient data collection about long-term globalized
procurement and highlighting the complete procurement process of the aforementioned industry.
The goal of this paper was to have a thorough insight of the various aspects and criteria in global
procurement. Finally, the members of the group put up their best efforts to analyze and gather
relevant information in order to make the report informative, relevant and timely. In addition, the
class lessons' relevance and understanding has been tested in a real-world business setting by
preparing this through report.
Table of content
Acknowledgement......................................................................................................................1
Executive Summary...................................................................................................................2
Table of content..........................................................................................................................0
Introduction................................................................................................................................1
Business Background.................................................................................................................1
Objective and Scope of the Study..............................................................................................1
Methodology..............................................................................................................................2
Limitations.................................................................................................................................2
Planning for Global Procurement and Sourcing Functions........................................................0
Market Analysis.........................................................................................................................0
SWOT analysis of Hi-Tech steel & Re-rolling Mills.................................................................0
Supplier Research.......................................................................................................................1
Solicitation.................................................................................................................................1
Consolidation (through integration/synchronization)................................................................1
Technological Advancement......................................................................................................1
Vendor Management..................................................................................................................2
Sustainability concerns...............................................................................................................2
Supplier Diversity......................................................................................................................2
Ethics in Procurement and Sourcing..........................................................................................3
Social Responsibility in Procurement and Sourcing..................................................................3
Green Procurement.....................................................................................................................4
Cultural Consideration...............................................................................................................5
Landed Cost Calculation for Hi-Tech........................................................................................5
Conclusion:.................................................................................................................................8
References:.................................................................................................................................9
Introduction
Business Background
Hi-Tech Steel & Re-Rolling Mills Ltd is involved in the business of iron and steel, which includes steel
billets and reformed bars or rods which are used in various infrastructures. Hi-Tech Steel & Re-
Rolling Mills Ltd. has an Induction Melting Furnace which has a stellar capacity of 8 Metric tons.
The company’s primary concern remains in maintaining its quality and therefore believes, "Only the
Right Quality Product has the competence to survive in the Market."
In order to maintain this standard concern of theirs, the company has therefore set up world-class
machineries both for the factory and for the laboratory, thus allowing them to control the quality of
the products in every stage of the production of metal bars. For maintaining overall productivity and
quality during all the stages of production, a highly proficient group of dedicated engineers, chemists
and technicians are used. Hi-Tech has utmost attempt to deliver the goods within 3-4 days after
order confirmation.
Methodology
In order to gather all the relevant data and to have a proper idea regarding the company, one of our
groupmates visited both the head office and the factory which are located in Narayanganj. Along
with this, one of Hi-Tech Steel & Re-Rolling Mills Ltd.’s representatives were interviewed in order to
gain more insight regarding their procurement process and the company itself.
The data gathered from Hi-Tech Steel & Re-Rolling Mills Ltd.’s offices and interviews were
considered as the primary source of data for this report. Apart from this, other articles and journals
were used for references and industry standards which were used as secondary sources of data for
preparing the report.
Limitations
Due to Covid safety protocols being followed by the company, only one member of the team was
allowed to enter the premises of Hi-Tech Steel & Re-Rolling Mills Ltd.’s factory and office. This also
limited our chances of data collection on a larger scale and further limited our chances of observing
how the company functions in real time.
As access to the company premises was not granted for everyone, a virtual interview was conducted
among all members of the group and one of Hi-Tech Steel & Re-Rolling Mills Ltd.’s representatives in
order to gather insights and data regarding the company.
Planning for Global Procurement and Sourcing
Functions
Market Analysis
The steel industry's demand in any country is
primarily driven by two factors: the government's
ADP (Annual Development Program) plan, as well as
government infrastructure development operations,
and individual-level demand for the industry,
particularly in real-estate sector.
Right now, the demand for steel is increasing by day
where the per capita consumption is approximately
45 kg which is expected to grow 75kg by the year
2022. We are now facing an increase in demand as
the government has started working on
infrastructure development and other
industrialization projects. We are expecting an
industry-wide growth of 15% in the near future.
However, the increase in VAT and duty fees had a
bigger impact on the industry i.e., new VAT
implementation, high rate of interest etc.
We established our pricing strategy advertising plan, import strategy, distribution centers, supplier
selection, and other strategies by doing proper research. Our team continuously work on collecting
information on prices of raw materials from suppliers and try to keep up with what our client-base
wants as it has become a highly competitive market in recent times.
Solicitation
Solicitation is an aspect of the procurement process where the market actively seeks and solicits
offers from competing suppliers and request proposals. Basically, we go through the process of
gathering and formalizing the information needed for potential suppliers to create thoughtful and
timely offers. Solicitation is one of the most vital activities in Hi-tech. Suppliers are the most
important aspect for a business, and we must focus on the supplier's reliability in order to choose a
profitable source. Our solicitation process begins with a search for suppliers and the identification of
the specific requirements that they must meet. We've acquired enough information on our suppliers
for the analysis to match our specific requirements.
We engage with our suppliers by emailing them a copy of our supplier request letter as well as a
detailed list of the materials we want. We must emphasize satisfactory services, open
communication, and financial stability in the supplier's needs letter. We focused our study on one
characteristic of these providers: pricing, because it is critical when selecting suppliers to help us
develop our company in a better and profitable way. After pricing, our organization emphasized on
supplier reliability, which appears to be the most important issue to consider. We shortlisted
suppliers which have a decent track record of shipping the proper amount of items, keeping the
capacity to provide our supplies on schedule, and having a strong enough cash flow to supply the
product.
Technological Advancement
Importing innovative technology and sophisticated industrial equipment may be a major source of
innovation in emerging economies. Our company has decided to incorporate e-Sourcing, e-
Procurement technologies and information techniques into its supply chain management. We use
CRM (customer relationship management) software, which allows the establishment of a database
of all contacts, which any member of a team may access. We also use Logistics tracking technology.
Logistics monitoring technology is quite useful in rerouting routes that got interfered and get our
supplies and products back on track. We use the HS code in times of operating procedures of
imports. HS code is basically used to assess and verify the order and to avert any erroneous
shipment item.
However, we are yet to install other technologically advanced equipment like The ORC Technology,
Hybrit Process, Molten Oxide Electrolysis etc.
Vendor Management
Vendor management is critical to meeting corporate demands and objectives. Not only that, but
vendor management assists firms in cutting costs, mitigating the risk of supply chain interruption,
and assessing if products and services are delivered on time.
Selecting vendors - The vendor selection process involves researching and selecting the best
providers based on requests for quotations and requests for proposals. Hi-tech mostly
shortlists some vendors based on pricing, capacity, track record, reputation, quality, and etc.
Contract negotiation - Negotiation is an important component to consider when choosing a
vendor since it may strengthen the entire vendor selection process. It will assist us in
comprehending the needs of both parties, and this is how Hi-tech will negotiate and reach a
compromise as both sides' mutual demands are met.
Vendor on-boarding - All the documentation and information needed to establish a vendor
as an approved supplier will be available at Hi-tech. It will also assist the organization in
ensuring that the vendor pays for the products and services offered.
Monitoring vendor performance - Hi-tech will keep an eye on their supplier from the very
start, and this can be done easily by evaluating their performance to key performance
indicators. Hi-tech will also be able to maintain a competitive edge while maintaining
product quality.
Monitoring and managing risk - Hi-tech will evaluate suppliers as a risk and as one of the
major aspects in the vendor management process since it allows us to predict impending
risks that might have an influence on the organization's operations, such as lawsuits,
intellectual property loss, and so on.
Payment - Hi-tech also ensures a transparent payment procedure where the payments are
cleared on time/according to the contract with appropriate terms and conditions mentioned
beforehand.
Sustainability concerns
Supplier Diversity
Supplier diversity is a key concern in procurement and supply chain management as profitable and
efficient purchasing can be significantly affected by the variety of supplier. A fairly diverse supplier
network can leverage a company with competitive advantages over its competitors in market.
Greater variety in suppliers is likely to increase the chances of achieving maximum quality assurance
in minimum cost. All these factors will come together to ultimately increase the quality of a
company’s production, reputation, brand value and market share.
Hi-Tech & Re-Rolling Mills Ltd. rarely source their raw materials from international suppliers. Most of
the time, the company collects their required raw materials from different local suppliers. In local
supplier market, the company has an extended network of reliable suppliers with whom they trade
regularly. Hi-Tech & Re-Rolling Mills Ltd. choose to keep multiple local and international suppliers in
their supply chain to increase their profitability and minimize risk.
Hi-Tech & Re-Rolling Mills Ltd. doesn’t have a lot of international suppliers, but in the limited extend,
the company does trade with some suppliers outside the country. Generally, Hi-Tech & Re-Rolling
Mills Ltd. buys raw materials from several supplier companies of United Kingdom, China and India.
Like their local supplier network, the company’s international supplier network is also diverse
containing a number of varied suppliers from the aforementioned continents and countries.
The ore reason of maintaining supplier diversity for Hi-Tech & Re-Rolling Mills Ltd. both in local and
national market is to achieve cost effectiveness. Their strategy is, more suppliers they can include in
their network, the more their bargaining power will increase. Furthermore, maintaining such varied
and extended supplier network helps the company to mitigate risk from supply end to great extent.
The greater number of substitute suppliers they can pursue, the more their timely and on demand
delivery risk will decrease. Diversity of suppliers also ensures quality maximization of the raw
materials of Hi-Tech & Re-Rolling Mills Ltd. for example, all their required materials might not be
available from a handful of suppliers or even if available, the quality of those might not match their
required bar for quality control. in such case, having an extended and varied supply network can
come to use for purchasing different materials from different suppliers matching the quality and
quantity requirements.
Green Procurement
Green procurement means the sourcing of raw materials or processing services in a way which have
a comparatively meager amount of adverse effects on the environment and other relative factors.
Procurement is considered to be green when all the sourcing activities are eco-friendly and
possesses least harm to both living and non-living natural beings, or in short, to the surroundings.
Bangladesh government encourages business owners to follow production methods by
implementing methods or using environmentally friendly raw materials. Bangladesh holds
Bangladesh Standards and Testing Institution (BSTI) certification and ISO 9001 for quality
management. Hence Hi-Tech & Re-Rolling Mills Ltd. has set their goal to maintain quality and adapt
sustainable approaches regarding decisions for procurement.
There are some specific guidelines that Hi-Tech & Re-Rolling Mills Ltd. follows while conducting the
process of procurement. Recyclability of the purchases I one of the key concerns that are taken
under count. Moreover, the packaging is preferred to be durable and eco-friendly as well. Hi-Tech &
Re-Rolling Mills Ltd. also prefers to rely on energy-efficient resources for transportation. For this, the
company explores the options that uses minimum fuel.
The aforementioned aspects, considerations and strategies can help Hi-Tech & Re-Rolling Mills Ltd.
to ensure green procurement, minimize environmental degradation and earn a positive reputation in
the market. These may also create a favorable image and generate goodwill within the industry.
Cultural Consideration
Consideration of cultural aspect is important for sustainability and strategic progress while
conducting business. Although Hi-Tech & Re-Rolling Mills Ltd. does not source their raw materials
from international market in large extent, still they have to conduct procurement activities in
international market seldom and in moderate bulk. So it is important for the company to
acknowledge the cultural differences throughout the continents and process their sourcing activities
in coordination of the variances.
Most of the employees and managers of Hi-Tech & Re-Rolling Mills Ltd. are Bangladeshi locals and
are familiar with the corporate and business norms of this area. But while conducting business in
abroad with these local employees, the company must consider the cultural difference between the
home country and country it is trading in, address the anomalies that can rise because of these
differences and take necessary managerial steps for annulment of the issues. For instance, the
company organizes training sessions for the employees of procurement end to train ways of
handling and communicating with international suppliers. Hi-Tech & Re-Rolling Mills Ltd. buys raw
materials from India, China and UK, it familiarizes its employees with the beliefs, social obligations,
environmental and governmental regulations, etc. of that region. Not only that, the company also
modifies its system and strategies based on the region and culture it is trading in for smooth
procurement process and sustainable supplier relationship in long term.
LC/FTT:
USD BDT
1. LCAF/LCA/IMP/TM 1,000.00
2. L/C Value $ 84,000.00 7,207,200.00
3. L/C Margin (5%) $ 4,200.00 360,360.00
4. L/C Commission (15%) 1,081,080.00
5. Vat on Commission (10%) 108,108.00
6. SWIFT Charge 1,500.00
7. Vat on SWIFT Charge 150.00
8. Stationery + VAT 200.00
9. Stamp Charge 200.00
10. Amendment Charge + Vat 1,500.00
8,761,298.00
INSURANCE
1. Marine @ 8% 5,765.76
2. War & SRCC @ 5% 3,603.60
Net Premium 9,369.36
3. VAT @ 10% 936.94
4. Stamp Duty 1,000.00
1,936.94
SHIPPING COST
1. Duty (CD, RD, SD, VAT, AIT, ATV) @ BDT. 2300/ton 345,000.00
2. Jetty Landing & River Dues 3,000.00
3. LCL/FCL Charge 37,500.00
4. ITC Licence Fees 50.00
5. Survey Fee 1,500.00
6. Assessment Fee 8,000.00
7. DO ( Delivery Order) 2,000.00
8. Labour Charge for Loading & Shorting at Jetty 15,000.00
9. Cargo Un-Stuffing Expenses 2,000.00
10. Amendment Exp. 500.00
11 Container Placement 25,000.00
12. Bank Charge 15,000.00
13. Incidental Expenses -
14. Bill of Entry Charges 100.00
15. Wrong Mark Expenses -
16. C&F Paperwork on Customs @ 1.5% -
17. C&F Commission @ 3.5% (Assessment/LC Value) 2,522.52
18. Misc. Expenses 2,000.00
459,172.52
CARRYING COST
1. Transportation by Truck 75,000.00
75,000.00
UNLOADING COST
1 Magnet charge 22,500.00
2 Magnet Operator Charge 22,500.00
45,000.00
Hitech Steel. (n.d.). Hi-Tech Steel & Re-Rolling Mills Ltd. http://hitech-bd.com/
https://customs.gov.bd/portal/services/tariff/print.jsf?c=72