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A SEMINAR REPORT

ON
UNDERSTANDING THE SUPPLY CHAIN MANAGEMANT
OF YETI DISTILLERY PVT. LTD.

(Submitted to Purbanchal University for the partial fulfillment of Degree of


Masters of Business Administration)

SUBMITTED BY:
Vivek Tiwari
PU REG. NO:

PRESIDENCY COLLEGE OF MANAGEMENT SCIENCES


(Affiliated to Purbanchal University)
BHARTPUR -10, CHITWAN, NEPAL

July, 2019

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DECLARATION

I, Vivek Tiwari declare that this thesis entitled “Understanding the Supply Chain
managemant of Yeti Distillery Pvt. Ltd”submitted in partial fulfillment of the MBA
Degree, the Faculty of Management, Purbanchal University is my original work carried
out under the guidance of Dr. Uttam Kumar Regmi and has not been submitted
anywhere for the award of any other degree or commercial purpose. In keeping with the
ethical practice in reporting scientific information, due acknowledgements have been
made wherever the findings of others have been cited.

Vivek Tiwari
PU Reg. No: 070-2-3-00080-2018

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ACKNOWLEDGEMENT

This report has been prepared as a partial fulfillment of Master of Business


Administration (M.B.A.) of 2th Semester, Presidency College of Management
Sciences. The successful accomplishment of this Seminar report would not been possible
the support and cooperation’s of great number of individuals..

I feel a great pleasure to express my deep gratitude to Mr. Suman Poudel, HOD of
PCMS, for his guidance, suggestions advice and support in every steps of this report.

I acknowledge my deepest gratitude to Yeti Distillery Pvt. Ltd. family for providing me
this golden opportunity for carrying out a technical analysis of the Supply Chain
Management of the company. I am sincerely grateful to Mr. Abhishek Shrestha
,executive director, Yeti Distillery Pvt. Ltd. for his all-time cooperation and supportive
nature.

Besides I would like to show deepest sense of gratitude to Prof. UttamRegmi, PhD,
Director, Past Campus Chief, Purbanchal University School of Management, Biratnagar
for giving knowledge about supply chain managements. This report is the result of his
effort.

I also thank to all my colleagues and friends, other respected faculties, librarian, lab
technicians, office staffs for their direct /indirect help, support, interest and valuable
hints.

Last but not least I would like to thank my family for supporting and encouraging me
during the whole study.

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EXECUTIVE SUMMARY

The consumption of alcoholic drinks in the households of Kathmandu is a common


practice. Some household prepare their own homemade liquor, namely; Ala, Raksi and
Chhaang, while others prefer consuming branded liquors manufactured inside the country
and abroad. The rate of consumption of homemade liquor is hard to acquire, however, the
consumption of bottled liquor which are manufactured in large scale for commercial
purpose can be acquired and analyzed for market research.

The main purpose of this study is to know about the supply chain management in Yeti
Distillery Pvt. Ltd. The seminar series gave clear idea about supply chain management
and this report makes crystal clear about supply chain management as we went on deep
study about Yeti Distillery Pvt. Ltd. and its supply chain management .

The report is divided into three chapters. The first chapter is Introduction which includes
background, objectives, statement of the problem, methodology, literature review,
limitation and organization of the Project Report. The second chapter is observation and
analysis and the third chapter is summary, findings and conclusions.
As my topic is cement industries, I got chance to know the present scenario of supply
chain management of cement industries because supply chain optimization is now a
major research theme in process operations and management. The data required to
complete report are obtained from direct phone contact and electronic mail and also from
different research journal and other websites and site visits.

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TABLE OF CONTENTS
TITLE PAGE .............................................................................................................................. i
DECLARATION........................................................................................................................ii
ACKNOWLEDGEMENT ....................................................................................................... iii
EXECUTIVE SUMMARY ....................................................................................................... iv
TABLE OF CONTENTS ........................................................................................................... v
LIST OF ABBREVIATIONS ................................................................................................... vi
CHAPTER 1 : INTRODUCTION ............................................................................................. 1
1.1. Background of the study ............................................................................................. 1
1.2. Objectives of the study................................................................................................ 2
1.3 Study methodology ..................................................................................................... 2
1.4 Limitation of the study ................................................................................................ 3
1.5 Literature Review........................................................................................................ 3
1.6 Organization of the study ............................................................................................ 3
CHAPTER 2 : OBSERVATION AND ANALYSIS ................................................................... 4
2.1 Introduction ................................................................................................................. 4
2.2 Annual Raw Materials Required ................................................................................ 5
2.3 Supply Chain of UCIL ................................................................................................ 5
2.4 Current Challenges...................................................................................................... 8
CHAPTER 3 : SUMMARY, FINDINGS & CONCLUSION .................................................... 9
3.1 Summary ..................................................................................................................... 9
3.2 Findings....................................................................................................................... 9
3.3 Conclusion ................................................................................................................ 10
REFERENCES ........................................................................................................................ 11

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LIST OF ABBREVIATIONS

Pcms = Presidency College of Management Sciences


& = And
CSR = Corporate Social Responsibility
Etc. = et cetera
GMP = Good Manufacturing Practice
ISO = International Organization for Standardization
Ltd. = limited
MBA = Master of Business Administration
No. = Number
Pvt. = Private
PU = Purbanchal University
REGD. = Registration
R&D = Research and Development
SCM = Supply Chain Management
YDPL = Yeti Distillery Pvt. Ltd.
MT = Metric tone
ESP = Electrostatic Precipitator

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CHAPTER 1
INTRODUCTION

1.1 Background of the study

Nepal is a developing country in South Asia where the works of infrastructure Beer is the
oldest alcoholic drink known to mankind. It is the most consumed alcoholic drink in the
world and the third most popular drink after water and tea. Beer is a result of hydrolysis
or saccharification of starch or sugar, which is later mixed with hops (bitter agent) and
fermented with yeast.

The process of preparing beer is called brewing.

A better trade relationship with India helped introduce beer in Nepal. A brewery under
Mohan Mekin was first established in Kathmandu, Nepal in 1982. For the last 25-30
years, the introduction of many international and local brands has created a niche market
for beer in Kathmandu. Yeti Distillery has been commercial production since 1986. Old
Durbar whisky is it’s well known and familiar in Nepalese market along with abroad. The
distillery is located in Nagarban marg, Narayangarh and head office in Kathmandu.

This study tends to analyze the supply chain management of YDPL and problems it is
facing related to supply system.

Supply chain management (SCM) is the active management of supply chain activities to
maximize customer value and achieve a sustainable competitive advantage. Supply chain
activities cover everything from product development, sourcing, production, and
logistics, as well as the information systems needed to coordinate these activities. Supply
Chain Management (SCM), the management of the flow of goods and services, involves
the movement and storage of raw materials, of work-in-progress inventory, and of
finished goods from point of origin to point of consumption. SCM is concerned with the
efficient integration of suppliers, factories, warehouses and stores so that merchandise is
produced and distributed in the right quantities, to the right locations and all right time to

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minimize total system cost, satisfy customer service requirements and face global
competition.

In order to maintain the competitive advantage in today’s changing economic


environment, companies are thriving to explore new ways in their business operations.
The companies now are looking for answers in making their supply chains a focused area
for improvements by various cost reduction technologies. This majorly includes
managing the supply and demand, sourcing raw materials and parts, manufacturing and
assembly, distribution across all channels, and delivery to the customer.

1.2 Objectives of the study

Beer is the most consumed alcohol in the world. The lesser content of alcohol and ease
in production are the major forces behind the higher consumption of beer. Most
European cultures signify themselves as the primary brewers and consider their
homegrown beer to be the best in the world. Proper supply of products from brewery to
targeted market is a large problem in developing countries like Nepal.
. The main objective of this study are:
 To know about the characteristic of SCM in brewery industry of Nepal.
 To know about the role of SCM in the brewery industry of Nepal.
 To identify the right Supply Chain for brewery industry in Nepal.

1.3 Study methodology

The methodology adopted for this study is as follows:

 Primary data is collected by interacting with some of the experienced person in


the industry and also the manager of Yeti Distillery Pvt. Ltd.
 Secondary data is collected from the information, documents, reports published
and other materials relating to Brewery Industries and others Journals, research
papers and articles from various online sources and websites.

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1.4 Limitation of the study

While working with this study, I faced some limitations in terms of having access to
information belonging to the industry. I did not have access to many documents which
prevented me from including up a lot of information and details about certain topics of
the report. The data obtained from various websites are not the recent one .Although I
had this limitation, however I have tried my level best to fulfill the objectives of this
report properly

1.5 Literature Review

A supply chain is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into intermediate
and finished products, and the distribution of these finished products to customers.
Supply chains exist in both service and manufacturing organizations, although the
complexity of the chain may vary greatly from industry to industry and firm to firm.

Supply chain management is typically viewed to lie between fully vertically integrated
firms, where the entire material flow is owned by a single firm, and those where each
channel member operates independently. Therefore coordination between the various
players in the chain is key in its effective management. Cooper and Ellram compare
supply chain management to a well-balanced and well-practiced relay team. Such a team
is more competitive when each player knows how to be positioned for the hand-off. The
relationships are the strongest between players who directly pass the baton, but the entire
team needs to make a coordinated effort to win the race.

There is no strict definition of supply chain and supply chain management. As these
topics are developing people gave them different definitions.

According to (Cooper and Ellram 1993) "supply chain" seems to be more common across
authors than the definition of "supply chain management" .

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La Londe and Masters proposed that a supply chain is a set of firms that pass materials
forward. And because it is common that several independent firms are together involved
in delivering products, from manufacturing the product to placing it in the hands of the
end user, all of them according to (La Londe and Masters 1994) are members of a supply
chain.

Christopher (2005) defines Supply Chain as a network of organizations that are involved,
through upstream and downstream linkages, in the different processes and activities that
produce value in the form of products and services in the hands of the ultimate consumer.
In general, a supply chain network is designed and developed to create the maximum
value for the supply chain members, from the original suppliers to the final customers.

1.6 Organization of the study

This study report has been organized into three main chapters:

Chapter 1: Introduction

Chapter 2: Presentation and Analysis

Chapter3: Summary, Findings and Conclusions.

CHAPTER 2
OBSERVATION AND ANALYSIS

This report is based upon the understanding of supply chain of YDPL. To know about the
supply chain and its implementation in the brewery industry of Nepal, I had chosen Yeti
Distillery Pvt. Ltd. as a sample unit. The major finding of the study are illustrated below.

2.1 Introduction

A better trade relationship with India helped introduce beer in Nepal. A brewery under
Mohan Mekin was first established in Kathmandu, Nepal in 1982. For the last 25-30
years, the introduction of many international and local brands has created a niche market
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for beer in Kathmandu. Yeti Distillery has been commercial production since 1986. Old
Durbar whisky is it’s well known and familiar in Nepalese market along with abroad. The
distillery is located in Nagarban marg, Narayangarh and head office in Kathmandu.

2.2 Annual Raw Materials required

The distillery industries uses sugarcane, molasses, cereals and other agro products for
producing alcoholic beverages. Yeti Distillery Pvt. Ltd. has annual requirements of raw
materials as below:

 Lime Stone: 3,30,000 MT ( extracted from own source)


 Iron Ore: 4,000 MT ( import from India and Bhutan)
 Clay: 57,000~82,500 MT ( obtained from own source)
 Gypsum: 10,500 MT ( import from India and Bhutan)
 Silica Sand: up to 21,000MT ( obtained from own source
 Furnace Oil/ Diesel ( Nepal Oil Corporation)
 Cement Bag/ Sag ( purchase from India and Bangladesh)

2.3 Supply Chain of UCIL.

In today’s business environment with globalization, specialisation, innovation, and


outsourcing, it is crucial for entities to corporate and work in networks. However, such
networking may come with its own problems. For instance, one small problem in any part
of the supply chain might cause severe problems for the whole network. Thus, supply
chain management is needed. Supply chain ensures the smooth and timely flow of goods
and services in the cost effective way satisfying the needs and demands of the consumers.

The supply chain of Yeti Distillery Pvt. Ltd. starts from the extraction and outsourcing of
raw materials and ends by being the manufactured cement available to the market. The
detail explanation of the SCM of YDPL is illustrated below with diagram.

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Fig-1: supply chain of Yeti Distillery Pvt. Ltd.

Raw materials
Basic Raw Materials like sugarcane and cereals are purchased from Nepalese local
markets but other ingredients and chemicals are imported from foreign market.

Factory
The main process of brewery production is carried out in the factory situated in the
Nagarban, Chitwan district. The industry has its head office situated in Kathmandu.

Warehouse
The manufactured brewery items like beers and whishky are transferred to the warehouse
after being quality checked. Road transportation like trucks and lorries are used to carry
the manufactured products from the manufacturing sites to the ware house.

Markets

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The manufactured cements are supplied to the market as per the demand of the
consumers. The company is following the intensive distribution channel for the
distribution of the cement to the market. Number of dealers and wholesellers are
distributing the products in the market and at the same time collecting the information
regarding the market condition.

2.4 Current Challenges

Every brewery industry is present in external environment where they have to face
different challenges as delay in dispatch of raw materials due to land locked country,
unethical custom charges ect. So, the challenges faced by Yeti Distillery Pvt. Ltd. as per
my findings are as follows:

 Economies of scale: YDPL is a large scale organization established to fulfill the


demand of whole nation as well as to export and also installed plant and
machinery are of higher capacity. But due to lack of knowledge and information,
resources aren’t utilized optimal.

 Illegal entry of Brewery: Because of illegal entry of liquor from the boarder and
its supply at cheaper price, the demand of the beer and whishky of YDPL is
getting affected.

 Weak Supply Chain: Most raw materials needed are imported from outside the
country and political instability leads to weak supply chain. Company is unable to
reach to each and every corner of Nepal.

 Frequent power failure, load shedding, lockouts, strikes and machinery break
down are the major challenges that is affecting the supply chain of the company.

 Political instability and poor labour laws are also the factors affecting the
operation of the company.

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CHAPTER 3
SUMMARY, FINDINGS & CONCLUSION

3.1 Summary

Yeti Distillery Pvt. Ltd. is one of the leading industry in brewery market. Yeti Distillery
Pvt. Ltd. is established and doing its regular production form 1986 under the companies
ACT 2021. The plant was jointly financed by Government of Japan and Government of
Nepal. Out of total investment 18.77 Crore Japanese Yen was from OECF Japan grant
and rest 44.38 Crore was financed by GoN. The construction work of plant was started on
2046 by Kawasaki Heavy Industry Japan and commercial production was started from
Magh 2049 with 277,000 MT of cement per year. The industry is producing high quality
Ordinary Portland cement in its brand name ‘Gaida Chap’ and it is currently providing
employment opportunities to more than 500 people including local and non-local people.
YDPL is producing quality cement and is maintaining its supply chain in a effective way.
The required raw materials are extracted from its own source in localmarket Some are
also imported from india and Bhutan.

3.2 Findings

Yeti Distillery Pvt. Ltd. with a large day to day production, is one of the well known
brewery in Nepal located at Nagarban, Chitwan which is about 1km far from
Narayangarh. Yeti Distillery has been commercial production since 1986. Old Durbar
whisky is it’s well known and familiar in Nepalese market along with abroad. Some
major finding of this study are as follows:
 About 30% of the market demand is fulfilled by the YDPL.
 The raw materials required are extracted from its own source and some are
imported from india and Bhutan.
 Because of frequent power interruption, political instability, and poor labour law,
the UCIL is not being able to produce the cement in optimal capacity.

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 To be environmental friendly in compliance with mineral laws, modern machines
with electrostatic precipitator (ESP) is installed. This technology collects dust,
that otherwise spreads in the atmosphere causing air pollution.
 To minimize the impact of power supply failure and machines breakdown, a
separate transformer has been installed and adequate spare parts reserve have
been created.

3.3. Conclusion

This report can conclude that, traditionally, cement supply chain is driven by asset
utilization. Assets are represented by production plants, infrastructure and transportation
equipment. Asset utilization is a given for the largest companies in the cement industry.
This is why they are moving to Efficiency and / or Customer Response objectives to
differentiate and to gain competitive advantage in the market. This change in strategy
requires cement companies to build supply chain management capabilities that
traditionally asset utilization companies don’t have, in order to succeed in the new
competitive environment.

Because of the asset utilization focus of cement companies, there were significant
investments to improve cement manufacturing processes. As a result, a highly automated
and continuous production process was developed. Today, large investments are required
to improve manufacturing capabilities, so SCM may be seen as the new frontier of cost
reduction in the cement industry.

Practices such as collaboration and information sharing with upstream and downstream
supply chain partners are a significant opportunity to gain alignment for cement
companies.

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REFERENCES

1. https://ctl.mit.edu/sites/ctl.mit.edu/files/library/public/theses_2009_Agudelo_Exe
cSumm.pdf.
2. http://ucil.org.np/AboutUs
3. https://www.inheadline.com/news/overview-of-the-cement-industry-in-nepal
4. https://www.scribd.com/doc/44810167/Cement-Industry-in-Nepal
5. https://www.researchgate.net/profile/Ashish_Shrestha12/publication/311915295_
Energy_Use_in_Nepalese_Cement_Industries_Case_of_Udayapur_Cement_Indus
tries_Limited/links/58625ce408ae329d6201b53a/Energy-Use-in-Nepalese-
Cement-Industries-Case-of-Udayapur-Cement-Industries-
Limited.pdf?origin=publication_detail
6. https://www.researchgate.net/profile/Tarek_Elhasia/publication/257718849_Appr
oach_to_Innovative_Supply_Chain_Strategies_in_Cement_Industry_Analysis_an
d_Model_Simulation/links/5750a82208ae1c34b39c4394/Approach-to-Innovative-
Supply-Chain-Strategies-in-Cement-Industry-Analysis-and-Model-
Simulation.pdf?origin=publication_detail
7. Fisher, M. (1997, March). What is the Right Supply Chain for your Product?
Harvard Business Review, 75(2), 105-116.
8. Lee, H. (2002, Spring).Aligning Supply Chain Strategies with Product
Uncertainties. California Management Review, 44(3), 105-119.
9. Porter, M. (1980). Competitive Strategy. New York, United States: The Free
Press.

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