AN OPERATIONAL ANALYSIS OF RAK CERAMICS

COURSE CODE: MGT314

SECTION: 03

Submitted to,

MD. MOFASSEL HOSSAIN (Lecturer of Management Department of NSU)

Submitted by:

GROUP NAME: Anti-Clock

GROUP NUMBER: 06

SL NAME ID
1 Jannatul Ferdaus 1420279030

2 Krishan Money 1620469030

3 Debojuti Das Anik 1521880030

4 Binita Sarker 1410470030
5 Mahedi Hasan Toha 1530022630
6 Shaikh Md Asadullah 1530023630

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 Acknowledgement

Before we get into the thick of things, I would like to add a few words of appreciation for the people
who have been a part of this assignment right from its inception. The writing of this assignment has
been one of the significant academic challenges I have faced and without the support, patience and
guidance of the people involved, this task would not have been completed. It is to them, that I owe my
deepest gratitude. It gives me immense pleasure to present this report on the operational analysis of an
organization. It has been my privilege to have a project guide, who has assisted me from the
commencement of the assignment. The success of this project is a result of sheer hard work and
determination put in by our team, with the help of my project guide. I hereby, take this opportunity to
add a special note of thanks for Md. Mofassel Hossain, my MGT314 course instructor, who undertook to
act as my mentor despite his many other academic and professional commitments. His wisdom,
knowledge and commitment to the highest standards inspired and motivated me. Without his insight,
support and energy, this assignment would not have kick-started and neither would have reached
fruitfulness. We also feel a heartiest sense of obligation to my team members, who helped me in
collection of data & resource material, and also helped in drafting the agency report.

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 Letter of Transmittal

21th August, 2019

Mofassel Hossain Lecturer,

Department of Management School of Business and Economics

North South University

Subject: Submission of report on “Operation Management Process of RAK Ceramics”.

Dear Sir,

We have completed this report as part of our Operation Management course. The report has been
compiled as per your instructions and also depending on the organization. It gives us immense pleasure
to tell you that working on this report has given us a wide range of exposure. The report is based on the
knowledge, experiences and the skills that we have acquired during our period of visiting in RAK
Ceramics BD.

We are thus submitting this report with the hope that it lives up to your satisfaction. However we would
be glad if you enlighten us with your thoughts and views regarding the report. In addition, if you wish to
enquire about any of the aspects of the report, we would be glad to answer your queries. Sincerely
yours,

Jannatul Ferdaus

Binita Sarkar

Krishan Money

Debojuti Das Anik

Mahedi Hasan Toha

Shaikh Md. Asadullah

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 Executive summery

This report will discuss the evolution of RAK Ceramics Works, how the company was evolved,
established and became one of the prominent companies in the UAE and also in Bangladesh.

Firstly, we would like to give thanks to my honorable faculty member Mofassel Hossainn Sir for giving us
such opportunity to do research. Without his help and guidance, it would have never been done.

Secondly, we would like to give thanks to my fellow group member Jannatul Ferdas, for taking all those
pressure to make proper arrangements for the interview with the HR Admin of RAK Ceramics Mr.
Razzak,. Finally, we would like to mention our other group member’s name that are excellent, helpful,
cooperative and efficient without them this report would not be this much good. Their names are:
Binita Sarkar, Krishan Money, Debojuti Das Anik, Mahedi Hasan Toha, Shaikh Md. Asadullah. And also, I
would like to thanks them for their efforts to make this project.

After a brief introduction about the organization we will look into their Business Operation Analysis
particularly their Goal, Strategies & Competitive, Demand Forecasting, Strategic Capacity Planning,
Process Selection and Facility Layouts, Location Planning and Analysis, Quality management, Inventory
Management and Supply Chain Management. Followed by some recommendations that we suggest the
organization should consider in order to maintain their stronghold in this country and to expand them
largely across the globe. At the end of this group project we will be able to identify the existing
functional layout of the RAK and identify their lacking. And based on their lacking on their existing
process we would be able to give a recommendation on how they can make their existing production
more efficient and reduce the time or waste. We would be able to implement the tools that we learned
on the class from the Production Management Course and apply some of them to relate with the actual
production.

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 TABLE OF CONTENTS

No. Contents Page

1. INTRODUCTION 6
A. OVERVIEW OF THE BUSINESS IDEAS
i. BUSINESS PROFILE
6-8
ii. VISION
iii. MISSION
B. SCOPE OF THE WORK 8
C. METHODOLOGY 8
D. LIMITATIONS 8
2. Operational Analysis of RAK Ceramics 9
A. STRATEGIES AND COMPETITIVENESS ANALYSIS 9-10
B. DEMAND FORECASTING 10-11
C. STRATEGIC CAPACITY PLANNING 11
D. PROCESS SELECTION AND FACILITY LAYOUTS 11-14
E. QUALITY MANAGEMENT 15
F. INVENTORY MANAGEMENT 16
G. SUPPLY CHAIN MANAGEMENT 16-18
H. ENVIRONMENTAL FRIENDLINESS ANALYSIS 18-19
3. Improvement plan 22-24
4. CONCLUSION 25
5. REFERENCES 27
i. APPENDIX

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 Introduction

RAK a global ceramic multinational is in the Ras Al Khaimah. It is a public shareholding company with
H.H. Sheikh Saud Bin Saqr Al Qassimi. He is the Crown Prince & Deputy Ruler of Ras Al Khaimah as the
Chairman and Dr. Khater Massaad as the Chief Executive Officer. It has worldwide sales of over USD one
billion.

1. A. Overview of the Business Ideas

Business Profile: To build a world standard for quality and beauty, RAK basically started manufacturing.
They started their first production in 1991. Within 19 years it became a world class organization.

2, 27,000 sq meters of tiles and over 8500 pieces of sanitary ware is producing per day by Ras Al
Khaimah alone. It has operation in China, Sudan, Bangladesh, India and Iran. The global production of
RAK Ceramics is over 3, 60,000 sq meters of tiles and 11,500 pieces of sanitary ware per day. These
huge production of tiles make RAK Ceramics’ one of the largest multinational ceramic and porcelain
tiles and sanitary manufacturing in the world.

More than 150 countries across 5 continents, they are now exporting. In the Far East, Australia, USA &
Canada along with European countries they sells a large quantities of RAK ceramics with regular
shipments to all those countries. Among those countries, they have independent agents to fulfill the
marketing efforts.

With the subsidiaries in Germany, UK, Italy, Belgium, Georgia, Australia, China, India, Saudi Arabia,
Sudan, Bangladesh & Iran, RAK Ceramics’ plant capacity stands as follows-China – 11 million square
meter per annum, Sudan – 6.5 million square meter per annum, India- 7 million square meter per
annum & 250,000 pieces of sanitary ware per annum, Iran- 3.0 million square meter/annum and
Bangladesh – 6 million square meter and 250,000 pieces of sanitary ware per annum.

In terms of their model, they also have wide range of variation. They regularly add several new designs
in almost every week. Not only in production and design, RAK has wide range of size variety in their
products from 10 cm x 10 cm up to 125 cm x 185 cm. They also has 125 x 185 slabs which are the largest
Gres Porcellanato slabs in the world and used for a variety of internal and external applications.

RAK Ceramics is a ISO 9001: 2008 (ISO 9001:2008 Quality management systems Requirement is a
document of 30 pages which sets standards for organization’s management ) & ISO 14001: 2004 (ISO
14001 is a standard which is provided by international organization for standardization for reducing the
negative impact on environment ) certified organization.

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 RAK Ceramics (Bangladesh) Limited

RAK Ceramics (Bangladesh) was incorporated in 26 November, 1998. It is a joint venture company with
UAE. It was first incorporated as a public limited company. Now it is public limited company and
changed its name from RAK Ceramics (Bangladesh) Private Limited to RAK Ceramics (Bangladesh)
Limited on 10 June, 2008. They are now manufacturing ceramics tiles, bathroom sets and all types of
sanitary ware. They basically came to this position of producing products in some steps which are given
below-From 12 November, 2000 they started Commercial production, From 10 January, 2004 they start
the production of sanitary ware within their own plant, Further expansion of tiles and sanitary plant
ware in the year of 2007.

With 90% portion of ownership of RAK Ceramics by RAK Ceramics PSE and its nominees they basically
start their business in Bangladesh. Rest 10% is owned by S.A.K. Ekramuzzaman. Within eight years RAK
has become one of the leading manufacturing companies with an annual turnover of over BDT 3248
million. They basically produce high quality wall, floor tiles, gres porecellanato and sanitary wares
products in Bangladesh.

RAK is financed by IFC Bangladesh other than Lafarge Surma Cement Ltd, the only two company
financed by IFC. With over 1000 models’ active ceramics and porcelain they have huge collection of
design. Moreover, their R & D are adding more new design into their portfolio to meet the preference
of the customers. They have more than 40 models of exclusive range of sanitary ware like wash basins,
water closets, bathroom sets, bath tubs, shower trays, bathroom cabinets, accessories and decorated
sets. . They not only emphasized in the designing part of the RAK Ceramics, but also, they emphasized in
the size of the tiles. They have different types of tiles from 13 cm * 13 cm to 60 cm * 60 cm.

The manufacturing plant has a production capacity of 24,000 square meter tiles and 2,500 pieces of
sanitary ware per day. This total production is consumed by local market. RAK Ceramics (Bangladesh)
Limited is certified by ISO 9001:2008(ISO 9001:2008 Quality management systems Requirement is a
document of 30 pages which sets standards for organization’s management). RAK ceramics also have a
future plan to expand their operation by setting a new production plant in Hobigonj to fulfill the rising
domestic demand for tiles. For their reputation and good brand image they have been awarded as
“Superbrands” in 2009-2011

Mission, Vision and Goals

Vision: RAKs vision is to be the world's leading ceramics lifestyle solutions provider.

Mission: Their mission is to foster an internal culture that they are committed to their vision of becoming
the world's leading ceramics lifestyle solutions provider and they will achieve this by utilizing their
experience, their wide product range, their innovative approach and continuing to deliver quality. They
want to build a world class organization. They have applied their expertise in some of the most iconic and

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innovative projects around the world and they aim to continue to push the boundaries in new and
exciting projects as they move forwards.

Goals: The goal of the company is to relate their brand name in ceramics to best quality, dependability
and technical excellence As RAK ceramics is market leader now the company has a huge goal to meet and
also have different strategies to meet that huge goal. But they also have some barriers to meet the
ultimate goal such as big different competitors like AKIJ Ceramics and also some other companies. A little
discussion about goal, strategies and competitive analysis are stated below.

B. Scope of the work

The report deals with the operational analysis from both a theoretical point and a practical point of view
of RAK Ceramics tiles business. The study teaches us about Strategies and Competitiveness Analysis,
Demand Forecasting, Strategic Capacity Planning, Process Selection and Facility Layouts, Location
Planning and Analysis, Quality Management, Inventory Management, Supply Chain Management its
importance, its modern procedures and the models used to make it more effective and efficient. The
study will help us learn about the practical procedures used by leading organizations. Moreover, the
study will help us differentiate between the practical details and theories, which in turn will help us
understand how to improve an organization’s production management.

C. Methodology

We have visited Premier cement industrial part and conducted primary and secondary research for our
project. Primary research was based on interviews that we had taken during the visit. We have also
asked two managers some questionnaire regarding our topic. Moreover, our secondary research was
based on the information provided in their website annual reports.

Sources of Information

Primary: The primary information collected through a conversation with Md. Abdur Razzak(HR Admin),
Production Manager V. Chelladurai & Kinjarapu Venkateswarlu as well as some of their managers and
employees.

Secondary: The secondary information has been collected from websites, journals, books and some
other reliable relevant sources with up-to-date information. Both primary and secondary data sources
have been used to generate this report. Primary data sources are informal discussions with
professionals and observations. The secondary data sources are different published reports, annual
reports of premier cement company.

D. Limitations

The group’s most challenging task was to collect practical information from RAk Ceramics on forecasting
and financial information and relate the information with the theoretical aspects of the assignment.

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 Since, most of the information from the firms is confidential; the firm representatives don’t want to
disclose such private information. In addition, we are not able to show any official reports regarding
productions and operations.

Description

We gathered all the information and analyzed the operations of tiles business of the company to have a
better view and suggested some additional opinions to increase their efficiency, productivity, supply
chain management etc. which decrease their lead time and improve their organizational performance.

2. Operational Analysis of RAK Ceramics Ltd.

Operational analysis method that RAK use for examining their performance are given below-

A. Strategies and Competitiveness Analysis

RAK Ceramics is competitive enough sell their goods and services in the marketplace. They determine
what customers want and then provide them best service by meeting customers’ expectations. They try
to provide greater customer value and satisfaction in different specialized sector than competitors. To
remain competitive RAK consider who their biggest competitors are (Great Wall Ceramic, AKIJ Ceramic,
FU-WANG, CHINA BANGLA Ceramics, MIR Ceramics) while considering its own size and position in the
industry. The company develops a strategic advantage over their competitors. They always upgrading
their product and keep their product price reasonable than the other competitors.

They compete through combination of price, delivery time, and product or service differentiation.

1. Identifying consumer wants & needs:

Develop a clear picture of the

target customer using market
research and analysis. The sales &
marketing department of RAK Strategy
always tries to understand their Process
customers. They give lots of
importance on the customers view. of RAK
What the clients and customers
want and their expectation to the
company is the main base for the
market research and analysis. Figure 1: Strategy process of RAK Ceramics.

2. Price and quality: RAK Provide both grade A & grade B tiles meeting with requirements of
customers and provide those unique products in suitable price range. RAK normally sets a certain
price for each of its products according to the international market rate which is done in terms of
conversion of dollar ($) value. However, the rates keep changing every now and then. So, it is
adjusted by RAK and of course, keeping in mind the competitor’s price as well. The price of their

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 product depends on several factors like- The product type, Size, Color, Design, and Thickness etc.
They provide glaze and fashion to the customers based on their needs rather than focusing on
durability. Because in Bangladesh people like variety of finishing product in terms of their choice.
3. Advertising and promotion: RAK ceramics doesn’t follow massive advertising technique for
promoting because of their superior position in the market and huge demand helps to promote
their product itself. But RAK still do some advertising via billboards and some promotional
activities in Boishakhi TV by sponsoring some shows, because the Managing Director of RAK
ceramics is the 25% owner of Boishakhi TV.
4. Product and service design: RAK has their own research center in UAE who provides unique IDEA
for design & development for the target market. Their innovation meets every single present
trend during that time to market.
5. Location: Rak factory office is situated in Sreepur, Gazipur which is very much cost effective
because in Gazipur space fecality can be easily fulfilled due to high land efficiency and labor cost is
low there in terms of other places like Dhaka. RAK Ceramics (Bangladesh) Ltd owns factory land
measuring 32.68 acre.
6. Order winners: RAK ceramics is the only one organization that are providing 3D printed tiles to
the domestic consumers. It makes them totally inimitable product manufacturer then other
competitors which is reaching customers attention & helping them to increase their sells.

B. Demand Forecast for RAK Ceramics

RAK Ceramics produce a large number of tiles every year to meet their market demand. So, for the
production purpose the company has to forecast the future market demand. For that purpose, they use
the Naive forecast method and Judgmental forecast method. They forecast the future market demand
of tiles that equals to the previous period market demand adjusted by the executive opinions; sales
team opinion about the future demand and also the customer survey for knowing the consumer’s needs
and wants for a better forecast.

Here, show their last five-year demand and forecast (The actual value is real and the forecast value is
assume by using Naïve forecast method)

Year Actual (million squire meter) Forecast (million squire meter)

2014 6.25

2015 5.69 6.25

2016 6.45 5.69

2017 8.36 6.45

2018 7.68 8.36

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 2019 7.68

Figure 2: Actual & Naive forecast demand of RAK Ceramics.

Here we see the RAK Ceramic ‘s forecast of market demand is not much accurate which is one of the
most important elements of good forecast. So, we can say that their forecast technique is not good.

But they obviously forecast timely and their forecast is reliable for their supply chain partners.

Their forecast about market demand always is in written form which is meaningful and easy to use for
their employees and supply chain partners.

C. Strategic Capacity Planning for RAK Ceramics

RAK ceramic is one of the major players in Bangladesh tiles market. So they have an effective capacity
panning for the production of tiles.

They have a design capacity of 10.32 million square meters annually. The actual production was 8.57
mn sqm annually.

So capacity utilization = (𝐴𝑐𝑡𝑢𝑎𝑙 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 /𝐷𝑒𝑠𝑖𝑔𝑛 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦) × 100% = (8.57 mn sqm / 10.32 mn sqm)
× 100% = 83.04%

So RAK Ceramics has very good capacity utilization. They just have only 16.96% underutilization capacity.

Land Capacity: RAK ceramic factory office is located in Sreepur, Gazipur. The area of the factory is 32.68
acre. They have a big warehouse also in the factory which is 4.9 acre (approximate).

D. Process Selection and Facility Layouts

There are four types of process selection they are Job shop, Batch, Continuous and Repetitive. In terms of
process selection, RAK ceramics process type is Repetitive as they produce higher volumes of more
standardized goods or products which is required. Here equipment is highly specialized so worker’s skill is
lower. Only minor variations in the product or service being produced using the same process and
equipment so, repetitive process suits their product.

They have almost over 25,000 variety of design in tiles product. Where dimension of variation is fixed
which is given below with a quantity 24 lac sqm per day. But in here the produce different sizes of product
based on the needs and wants of customers. Therefor they forecast a quantity and then produce the
amount.

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 Figure 3: Tiles dimension of RAK.
RAK ceramics often organized as assembly lines, characterized by modules with parts and assemblies
made previously, modules may be combined for many output options, less flexibility than process-focused
facilities but more efficient.

In this product-Oriented Layout:

 Volume is adequate for high equipment utilization

 Product demand is stable enough to justify high investment in specialized equipment

 Product is standardized or approaching a phase of life cycle that justifies investment

 Supplies of raw materials and components are adequate and of uniform quality

 Organized around products or families of similar high-volume, low-variety products.

RAK tiles factory facility works as below-

1. Raw material goes down: 90% of raw materials of RAK ceramics is are imported from outside the
country. The main raw materials supplier of RAK is Global Business Association (GBA) and the supplies
are dealt in ordering process. After placing the order to GBA, raw materials are sent by ship to
Chittagong port and sometimes in Naryanganj from Chittagong port. From there Cargo trucks are
used to carry the clay to their production plant.

2. Lab: There is a miniature version of the whole production plant. In lab “master sample” of tiles with
different shapes are made on the basis of moisture, pressing power, density etc. This master sample is
the benchmark of tiles which is used to maintain the standard and quality of tiles. This master
sample’s readings are set into Master CPU for quality assurance of tiles.

3. Body Preparation: Body preparation sector calculates the weight of different clay which will be used
to make the tiles.

4. Box feeder: Raw materials are given input in BOX FREEDER by the help of wheel loader. Driver of
wheel loader checks the list and weight of each clay and inputs in the machine. There is an operator
who monitors this procedure.

5. Ball mill: From BOX FREEDER by the use of conveyor belt, raw materials are passed to BALL MILL. In
BALL MILL the raw materials are mixed with water to create slip, this procedure is called “milling”.

6. Slip tank: From BALL MILL the present form of clay which is also called slip is stored into SLIP TANK.

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7. Spray Dryer: From SLIP TANK, slip is moved to SPRAY DRYER, which forms the slip into powder or
granule. This powder or granule is stored into SILO or vertical tank.

8. Pressing Machine: This powder will be passed into PRESSING MACHINE through SILO. In PRESSING
MACHINE, the powder is given five bars pressing which converts the powder or granule in to raw tiles.

9. PRE-FIRING: In PRE-FIRING the raw tiles are taken through 200° degree Celsius, to reduce the
moisture of the raw tiles.

10. Glazing: The raw tiles will now go through the DISC Glazing BOOTH machine, where it will be covered
by the first coat of Coloring or Glazing.

11. Printing: After the DISC Glazing BOOTH process the tiles will go through the PRINTING MACHINE and
there it will get the necessary designs on top.

12. Glazing: The raw tiles will now go through the DISC Glazing BOOTH machine, where it will be covered
by the first coat of Coloring or Glazing.

13. Printing: After the DISC Glazing BOOTH process the tiles will go through the PRINTING MACHINE and
there it will get the necessary designs on top.

14. Kiln Loading: KILN LOADING MACHINE is basically a firing machine which gives huge heat on the tiles
to increase the hardness and reliability. It is a 75-meter-long oven also known as B&T KILN LOADING
MACHINE firing zone. The tiles are taken through a sequence of temperature starting from 400° to
800° to 1200° to 800° to 400° Celsius. The temperature sequence is kept like this because after
reaching to 1200° if the temperature suddenly falls then the heated tiles will break down. To ensure
continuous supply of power the kiln machine is connected with a generator to avoid any kind of
accident.

15. Sorting: After checking by Master CPU, the tiles which have 0% error are categorized as Class A tiles
and those tiles which have 3% error are categorized as Class B tiles. These two types of tiles are sorted
differently in different sorting machines where tiles are placed vertically in numbers for packing. For
Class A tiles white box and for Class B brown boxes are used. Then it is tagged by another sensor using
OCRCS system. This system is used to track the type, quality, size and other parameters by which they
can track the operator who checked the tiles if there is any complain form dealers or customers. This
OCRCS is used to give customers full guarantee of the quality of the product and also helps to prevent
fraud attempt by sellers.

16. Packaging: Workers manually finish packaging process with their hand and assemble them based on
their variation.

17. Ware house: After packaging, the finished goods are stored in warehouse by Stock Department and
dealers arrive with order papers of tiles to receive the delivery of the tiles for Stock Department.

This is the total manufacturing process of RAK ceramics.

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14 | P a g e Figure 4: Facility Layout of RAK tiles factory.
 E. QUALITY MANAGEMENT

At RAK ceramics industry, they are very strict about their quality and they never compromise about it.
Their quality is maintained continuously in every steps of their production process. Their head of HR
showed us many awards such as: ICSB AWARD 2015, 2016, SAFA AWARD 2015 etc. as well as they are
recognized by ISO 9000 & ISO 14001. From the year 1991, RAK is continual improving in terms of their
product quality and customer satisfaction. For ensuring the quality, they are exporting raw materials
from Malaysia which is the core elements of their total quality management. After arriving raw
materials, they make sure the quality of raw materials and then go to the warehouse. Last but not least
every single worker and workstation is working and maintains their own responsibility of his/her own
work. The machinery that is used in production came from Italy and some of the skilled operations
managers are hired from India, Nepal and from abroad. Those skilled workers are sitting on the higher
position of operations and continuously doing inspection to ensure the quality. Operation managers
are also connected with one workstation to other workstations and whenever any problem occurs, he
visits the area on time. They also have a control room in every workstation point to help for tracking
and finding easily defects.

RAK tiles covered the dimensions of quality:

Performance: RAK offers Ceramic & Homogeneous tiles & sanitary ware’s with best performance with a
high-grade raw material. Their product finishing is best to attract customer minds. They are competing
with their competitor in terms of their performance.

Aesthetics: The talented operation and designers are brainstorming and focusing to know about the
customer wants and demands. They try to design and provide unique products as well as which gives
aesthetic comforts.

Special Features: In RAK, all products designs are very catchy to customer attraction with their unique
style. So, customers easily want to get their products.

Conformance: They always make sure their product is more than better from others to get the
recognition by international quality control award such as: ISO 9000, ISO 1401 and many more.

Reliability: RAK brand takes the position in bottom of their customer minds. Customer is very reliable
with this brand.

Durability: Since ceramic is used for interior design or sanitary and wall, customers always focus the
durability of their product and RAK product’s durability is longer than others.

Perceived Quality: Only RAK is providing and following the product line for tiles and it’s differs from
every industry or situation. For example, for public place such as hospital, airport they provide different
types of sanitary product and for residential use different product. Hard, thick tiles are used for public
place.

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 Serviceability: RAK is also connected after selling the product with customer. They are getting review
and doing market survey to know the product efficiency.

F. INVENTORY MANAGEMENT

Inventory Management is one of the key determinants of efficiency in a ceramics industry. RAK Ceramics
maintains four types of inventories. If these inventories are managed properly then expected demand
can be met.

• Raw Materials Inventory: RAK ceramics select the best quality clay for their quality floor covering. RAK
use different types of clay for their tiles production. The types are: Indonesian Clay, Malaysian Clay,
Indian Clay, China Clay, Bangladeshi Clay, Czech Republican Clay. The main Raw material for Tiles is
different clays. And among those clays China clay is a major element. Raw materials are purchased and
stored in the amount of 6 to 7 months of production. As RAK has continuous production, and continues
demand in the market, keeping raw materials in stock is kind of mandatory as the raw materials are
imported from many places.

From, GBA (Global Business Association) RAK brings their clay and color. From SACMI they bring their
machinery, the company itself brings their pigment from Cerfrit the company from Spain.

• Finished Goods Inventory: Processed Tiles is stored in Silo which is packed inside with their certain
dimensions and cover up known as packed up tiles. In 2018, RAK produced around 8.59million sq. meter
tiles whereas they have the capacity to produce 11.68 million sq. meter.

• Goods in Transit and Warehousing: Premier cement has warehouses in different regions of Bangladesh
to store finished cement to facilitate sales in that area. Cement trucks are also kept loaded with cement
bags ready for distribution as well as in-house inventories.

• Safety Stock: RAK keeps safety stock of finished goods less but more raw materials. Because they have
efficient capacity which they use for production, as the maximum amount of raw material comes from
outside of the country, they think to keep them in stock for any kind of emergences.

RAK ceramics uses Physical Inventory management systems. They keep record of finished goods going
out in packets from the inventory for the destination.

G. SUPPLY CHAIN MANAGEMENT:

The supply chain management of RAK ceramics is fully controlled for getting efficient supply for their
production process that’s what the production manager of RAK Mr. Razzak concluded. RAK uses Third
Party Logistics - 3PL

Procurement team: Procurement team mainly purchases raw materials for the production process of the
company. The basic raw material of ceramics is different types of clay. RAK ceramics select the best class

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clay for their quality floor covering. RAK use different types of clay for their tiles production. The types
are: Indonesian Clay, Malaysian Clay, Bangladeshi Clay, Indian Clay, China Clay, Czech Republican Clay
these are imported from overseas, mainly India, China, UAE, UK, Singapore, Thailand, Malaysia and some
other countries.
For glazing or coloring there are several raw materials which arrives from Italy and Spain that RAK use to
color the tiles. The materials are: Color Pigment and Adhesive and Chemicals for stabilizing color. For
color they mainly rely on Cerfrit. Cerfrit is a company specialized in the manufacture of frits, glazes,
serigraphic printing powders and ceramic colors.

Suppliers of Raw materials: Almost 90% of the raw materials of RAK ceramics are imported from outside
the country. The main raw materials supplier of RAK is Global Business Association (GBA) and the
supplies are dealt in ordering process. GBA is a sister concern of RAK and it also supplies raw materials to
other company’s also. RAK places an order of the list of raw materials and GBA supplies the raw
materials. Cerfrit a company from Spain supplies “Cerfrit” for using in colors. Color pigment is supplied
by GBA which is collected from Italy.

Supplier of Power, Gas, Water: Sources of electricity supply are the Rural Electrification Board (REB) as
well as captive power plant named RAK Power Pvt. Limited, a subsidiary of RAK Ceramics (Bangladesh)
Limited. Water: Water supply is ensured from own deep tube well. Gas: The manufacturing operation
depends on Gas from Titas Gas Transmission & Distribution Company Ltd. RAK manufacturing set up has
flexibility of dual fuel fi ring capabilities in case of emergency or non-committal supply lapses.

Shipment of Raw Materials: After placing the order to their oversea supplier the raw materials are sent
by ship to Chattogram port and sometimes in Naryanganj from Chittagong port.

Raw Materials Transportation: The raw materials are brought by Cargo trucks from Chattogram to the
production plant. The Spare parts of the machineries are collected from an Italian company “SACMI”.
These are parts are sent by air.

Raw Materials Warehouse: after receiving the raw materials RAK store the raw materials at their
warehouse for raw materials.

Operation: in this stage the raw materials are being used in the production process. It includes the input,
process and output of the production.

Packing Raw Materials: The packets which are used to pack the final products are supplied by KEA
Printing and Packaging Company which is also a company of RAK. They provide cartoons that are used to
package tiles. KEA Printing and Packaging is situated right in front of RAK’s manufacturing plant in
Sreepur, Gazipur. Therefore it’s really easy to collect the cartoons from there. For “A” grade tiles they
use white packets and for “B” grade tiles they use brown packets.

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Final Product Warehouse: When the packaging is done the Categorized and packed products means the
final products are stored in the warehouse of RAK which is situated at Gazipur till the dealers or
customers takes it.

Transportation: After storing the final products in their warehouse RAK use various transportation
vendors to deliver their products at their dealers or customers place. And the dealers also have their own
transportation.

Dealers or retailers of their Products: After packing the products they sent the products from the
warehouse to their dealers as per demand. RAK has numerous numbers of dealers all around the country
depending on the location and product types. For tiles their main dealers are Saudia trade center, Kazi
Trading, Ripa enterprise, Saroda traders, Mahedi Trading, Sherpur Trading and many more. Sub-Dealer:
RAK doesn’t control the sub-dealer. Sub-dealers purchase from the Dealers.

Customers: Customers can either buy directly from RAK factory or they can buy the products from the
dealer, sub-dealer or retailers at selling price.
Order Fulfillment: RAK ceramics doesn’t have a specialized service center for customers because it isn’t
required in that extend.

Greening the Supply Chain: A unique “green building” concept product from RAK Ceramics that
contributes to the Environment Possible with High Technology and innovations from RAK Ceramics has
recently successfully launched the commercial production of Thin Tiles of 4.5 mm thickness. RAK SLIM is
a Gres Porcellanato tile and offered in matt finish. The greatest beneficiary is the environment, and other
benefits are all commercial, down the distribution level & the user level. Having a very high satisfactory
strength by international standards, RAK SLIM is a tile that is like half the thickness of a normal tile. This
way, thousands ton of raw materials starting from clays– natural & otherwise will be saved. Energy costs
in fi ring the tile are also considerably lower, and last but not the least, the emissions from plants that is
a result of manufacturing of the tiles is far lower as lesser energy is consumed, and lesser raw materials
& chemicals used in the process.

H. Environmental Friendliness Analysis

RAK Ceramics is committed to practice environmental stewardship throughout its value chain, including
product design, sourcing and efficient operations and plays an active role in contributing to a greener
environment. RAK Ceramics is a significant consumer of natural resources like minerals, energy, water
etc. And therefore, it recognizes the importance of the conservation of these precious resources. RAK
Ceramics’ operations have the potential to adversely impact the surrounding environment and we are
constantly striving to minimize and mitigate impacts. RAK Ceramics has undertaken environmental
impact assessments of its operating sites and has taken steps towards minimizing impacts and
conserving resources through progressively reducing emissions, discharges, and wastes. In 2013, RAK

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focused on increasing the environmental awareness of our employees at all levels through a series of
CSR activities and training programs.

RAK Ceramics manufacturing base was strategically set up in Ras Al Khaimah because of the availability
of good quality local clay and minerals best suited to manufacture ceramic products. Over the years, RAK
Ceramics has developed the expertise to combine 5 to 9 types of natural minerals, coming from several
countries around the globe to minimize the damage to the local environment. Material used in
manufacturing is a mix of natural substances such as limestone, soda feldspar and red clay. An average
tile size of 60x60 cm weighs 9 kg and after the tile clay is fired the composition in the tile cannot be
renewed. There is 2% defect in production and all the defected ceramic products before firing are re-
cycled and re-used leading to zero wastage. 80% of rejected in-process materials and waste sludge
recycled and re-used. RAK Ceramics’ manufacturing facilities are equipped with high efficiency burners
which are utilized in all fired heaters or fuel burning equipment such as generators, kilns, spray driers,
horizontal and vertical driers, etc. to reduce energy consumption. The overall total energy consumption
is 1.39282e +15 Joules.

RAK Ceramics ensures regular preventive maintenance of equipment and devices so that water runs
smoothly and there is no wastage of water. Water consumption is regularly measured and data is
recorded to analyze trends to quickly detect major leaks and repair damages as soon as possible. The
employees are given training in order to spread awareness on water conservation to reduce unnecessary
wastage of water. RAK Ceramics operates several units of Effluent Treatment Plants to re-cycle and reuse
the wastewater generated from the manufacturing plants and domestic sources. A third party that is
authorized by the local government conducts water extraction. RAK Ceramics has its own water
desalination unit converting seawater to drinkable water. The water re-cycling unit uses the wasted
water during production, clean it and make useable for production again. 60% of water re-cycled & re-
used.

RAK Ceramics participated in 2nd International Conference on Global Warming Sustainable Cities, where
the company had a stand showcasing eco-friendly products and environmentally-friendly manufacturing
processes. Tiles from Wood Art Collection were promoted at the conference and received extremely
positive response from visitors to stand as it is considered as a perfect alternative to natural wooden
flooring playing a big role in conserving environment with reduction in cutting trees.

RAK Ceramics is strategically located in an industrial area, at a distance of 30 km from the city in a
deserted area, to minimize the risk of causing any damage to the environment or the inhabitants. This
minimizes the direct and indirect impact to the diversity like spillage incident of oil/ chemical direct
surface water and ground water or reaching the sea; operational noise affecting native species of birds,
marsh lagoons contaminated water possible by car wash in vehicle workshop and emission pollution of
stacks, chimneys, fuels etc.

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As per RAK Ceramics environmental policy, the company is committed to use best available
environmental technology and practices and progressively reduce emissions, discharges and wastes,
improve the efficient use of energy, and conserve natural resources. RAK monitors, assess, and track
their emissions, effluent, and wastes from their operations and strive for continuous improvement in all
of these areas. One of the major problems of their factory is the temperature is hot inside the factory
and it is difficult for workers to work in that temperature, If RAK can reduce the temperature then it will
be good for the employees and their efficiency will increase.

Improvement plan

RAK Ceramics has a lead time of 20 days. So, we want to reduce the lead time and improve their
performance.

A. Improvement of Competitiveness Analysis

All the critical issues related with RAK tiles factory has described below-
 Time-based strategies:
RAK ceramics factory in Bangladesh has almost every sort of recent technology for high production
facilities. Their annual production for past 3 years is 7.059 mn sqm for 2016, 8.69 mn sqm for 2017 and
8.59 mn sqm for 2018. They have 350 working days (15 days for safety check of machineries and
facilities) and 8-hour shift per day.
So, 3 labor provide 7 Labor hour per day. (1 shift=8 hour & 1-hour lunch break)
Where production is (8.59 mn sqm/ 350 days) = 0.0245 mn sqm or 24 Lac sqm per day
Which describes 24 Lac sqm production of tiles needs 7 Labor hour per day for packaging.
RAK ceramics factory doesn’t have any sort of packing
machine, labor do the packaging part with their hands
manually. Factories like China Bangla ceramics & DBL Ceramics
use modern technology for packaging. Although there are
different sizes of tiles are produced but packaging machine
needs minor portion of time rather than manual form.
Depending on the adopted configurations, the machine lets
users save on different cumulative levels like uses less
cardboard as a function of size maximizes storage
rationalization; stocks are drastically reduced and are not
bound to any particular size or brand as they take the form of
plain cardboard rolls. Figure 5: Tiles packaging machine.

In the factory 3 labor provides 7 labor hour per day (3 labor per shift & 7 labor hour) for packaging
purpose.

Where a machine can provide 5.5 hour (approximate) per day for packaging 24 Lac sqm tiles which will
Increase sorting line productivity and real time production of multiband products. It will reduce lead

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 time which will occur into increasing productivity performance. By that customer sale will increase
eventually. Before it needed 20 days for delivery; after planting a machine it will decrease into 18.75
days.

Because In 20 days (7hour*20 days) it needed 140 hours per unit by manual process and Machine will
afford (5.5 hour*20 days) = 110 hour per unit. Saving time will be 30 hour or 1.25 days.

But a machine cost 8 lac & 10-year warranty included.

Where (8 lac/10year) = 80,000-taka profit will decrease in 10 year.

If we convert this into per unit which will be (80,000tk/8,590,000) =0.00931 taka per unit

(Here 8.59mn sqm per year* 10 Lac depreciation cost)

Which defines 0.00931-taka profit will decrease into per unit but it will also decrease the lead time
from 20 days to 18.75 days.

Because of that productivity will increase in terms of performance and rate of customer sale will grow
higher. Therefore, a small portion of profit will be deducting from per unit profit then again due to high
technology machine lead time will decrease, for that performance value will improve.

B. Improvement of demand forecasting and capacity planning

If we can reduce the error of the forecast then we can accurately forecast about RAK Ceramics market
demand. So the company can quickly and more accurately forecast the demand and produce goods for
that demand. So their lead time will be decreased as they early produced their goods and their
performance will also increase.

Now, here we see, forecasting of RAK Ceramics’ market demand by using different methods.

Year Actual Forecast Forecast on Forecast on Forecast on

(million Naïve Moving Weighted
Exponential
squire method average moving
smoothing
meter) (million method average
method
squire method
meter) α= .1
(Wt-1=.7;
Wt-2=.2;
Wt-3= .1)

2014 6.25

2015 5.69 6.25 6.25

2016 6.45 5.69 6.19

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 2017 8.36 6.45 6.13 6.27 6.21

2018 7.68 8.36 6.83 7.71 6.42

2019 7.68 7.5 7.69 6.55

Figure 6: Actual & different method of forecasting market demand of RAK ceramics.

Now the error of those methods for 2017 & 2018 is: MAD = Σ /Actual – Forecast/ ÷n

So, MAD for Naïve method= 2.59/2 =1.295

MAD for Moving average method = 3.08/2= 1.54

MAD for Weighted moving average method = 2.12/2= 1.06

MAD for Exponential smoothing= 3.41/2=1.705

So, as we see that weighted moving average method gives RAK Ceramic the minimum error so they
should use weighted moving average method for their forecasting rather than naïve method.

We know that their capacity utilization is very good. It is 83.04%. But still there is enough scope to
improve their capacity utilization. By training employees and maintaining good operating condition we
can increase effective capacity which leads to increase capacity utilization. When they train their
employees, the employee can work more effectively because he/she has enough knowledge about
their work. When the workers work in a good working condition their productivity will increase. So,
RAK Ceramics can utilize their capacity more. By using same capacity, they can produce more. It
decreases their lead time as their performance increases.

C. Improvement of inventory management

There is some improvement that can be done on inventory management of RAK ceramics tiles. It is
because they face problem on their inventory management.

1. Over Storage: Even if RAK ceramics has a continuous demand in the market and it’s the market leader,
it will be beneficial for them to minimize the stock time of raw materials. Because if they keep
inventories for continue 6months, after every 6 months they need to order again and in this middle of
the time they are occurring huge costs for maintenance and occupying a huge space.

2. Inventory Counting System: RAK ceramics now use the physical counting system, which costs them
the number of employee and labor who are only dedicated for the inventory, their time, wages and
motoring them is also another cost.

3. Price increase in Market: RAK ceramics though supplies the best quality tiles in the market with a low
price possible but as being the market leader; they are trying to increase the price as they are occurring

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more costs now from their beginning. As we know Bangladesh is an economically poor country,
increasing price can hamper the sales in the long run.

Solutions and Recommendations by which they can improve their inventory management

1. To reduce the over storage of materials what RAK ceramics can do is build strategic partnership
relation with its suppliers and distributors so that RAK will not occur the cost and space for
longer to take the inventory. If they build the partnership relationship with distributors, the
distributors can easily meet the demands with lesser time as they have the stock of themselves.
On the other hands, if they build partnership relation with suppliers, that can achieve less costs
of inventory. In exchange of the partnership relation to the suppliers and distributors we can
provide a commission amount of 0.02% of monthly sales which will costs less than the excess
inventory costs and improve the existing relations among the suppliers and distributors.

2. RAK ceramics needs to change their counting system. They are now using the physical counting
system. They need to go for the perpetual counting system. Because of using the physical
counting system, they are occurring more employee and labor costs and which is happening
manually; as we know manually tasks like this takes lots of time and effort. So, RAK ceramics
change this counting system to perpetual counting system using automation will causes them
more efficiency with less people, time and space.

3. RAK ceramics can easily reduce the extra costs which are occurring in the inventory place by
following the strategic partnership relationship, so their maintenance costs will go down which
will help them to keep their head arise in the market by serving any income stage of people.

4. Instead of having one main building warehouse in Gazipur, with a better relationship with
suppliers or on its own, RAK ceramics can have one warehouse in every district of Bangladesh,
this will eventually reduce the safety stock in one place, more space will be free to use for many
things.

5. Building a good relationship with third party logistics can actually help them to serve more
perfectly and efficiently in the longer run.

6. If RAK ceramics actually follow the effective frame work of warehousing and transportation
connections, that will increase more space and decrease the lead time. And that more space can
be used for many things.

D. Improvement of SUPPLY CHAIN MANAGEMENT

There is some improvement that can be done on supply chain management of RAK ceramics tiles. It is
because they face problem on their supply chain management.

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 1. As we visited RAK factory plant, we experienced excessive heat caused by firing the clay and dust
from the clay powder which causes breathing problems. The whole plant was overly heated
which is not suitable for labors as this excessive heat can affect their health which can result in
low productivity. The ventilation system is windmill based. Exhaust fans work only when there is
wind. But it gets too much suffocating due to lack of power of the fans. Even during the rainy
season and days without wind the place gets humid.

Solution and Recommendation: if RAK can run the exhaust fans electrically, that would make the place a
bit cool and less humid during no wind seasons and more efficient. But it will raise the production cost.
So, we can install solar panels. These panels will take charge from sunlight and give power to all the
electric system, even at night

2. From the dryer section the dried powder goes to the press section. In the press section the
powder is pressed according to the size and design. After pressing the raw tiles are made and
goes to burn unit to burn and make it hard. After that it goes to the printing machine and design
and color is added. The next section is inspection. If the tiles are faulty and gets detected by laser
machine it is sent to cracking unit to crack and the whole process is started again to make it as a
new piece.

Solution and Recommendation: if the inspection unit is placed after the press and burn unit. Then if it is
inspected as faulty the tiles can immediately be sent to cracking unit. In this case the design and color
cost can be saved. Thus, it can reduce the whole cost and duration by a noticeable amount of time and
cost.

3. RAK doesn’t have any information about sub-dealer as they don’t connect with them directly. In
that way they might miss out demand of certain product at specific time. And according to that
they can provide the products.

Solution and Recommendation: Direct contact with sub-dealers can help getting enough information on
certain demands, products and customers which can decrease the lead time.

By following all the solution RAK Ceramics can improve all this sector of their tiles business which can
reduce their lead time and business performance.

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 CONCLUSION

RAK Ceramics has been recognized as the world's largest ceramic tile manufacturer by the 'Ceramic
World Review', the best known and most widely circulated international magazine devoted to ceramic
tile and sanitary ware production technologies. It dominates the rankings of the top 25 ceramic tile
manufacturers in 2009 with a total production output of 115 million square meters from 15
manufacturing facilities located in six countries. The company had first ever IPO under book building
method in Bangladesh, which was highest in collection in terms of amount and number of applications.
The company was rated AA+ in long term and ST-1 for short term, which was highest rating in
manufacturing sector in Bangladesh.

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 The work is distributed among us as per this diagram

SL NAME & ID RESPONSIBILITY MOBILE

1 Name: Jannatul Ferdaus Supply Chain 01624538400
ID: 1420279030 Management

2 Name:Krishan Money Forecasting and 01711000286

Strategic Capacity
ID: 1620469030
Planning
3 Name: Debojuti Das Anik Quality Management 01772180800
and Quality Control
ID: 1521880030
4 Name: Binita Sarker Inventory Management 01781559926
ID: 1410470030
5 Name: Mahedi Hasan Toha Competitiveness, 01974306550
Strategy, and
ID: 1530022630
Productivity & Process
Selection and Facility
Layout
6 Name: Shaikh Md Asadullah Environmental 01781105522
Friendliness Analysis
ID: 1530023630

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 References

Primary sources

Md. Abdur Razzak (HR admin)

Contact: 01713125885, Gmail: abdur.razzak@rakceramics.com

Kinjarapu Venkateswarlu (Production Manager-Tiles)

Contact: 01770790728, Gmail: venkateswarlu.k@rakceramics.com

Secondary sources

 References: 1) Essays, UK. (November 2018). Value Chain Process of RAK Ceramics
Business Essay. Retrieved from https://www.ukessays.com/essays/business/value-chain-
process-of-rak-ceramics-business-essay.php?vref=1
 2) Annual Reports. (“n.d.”). RAK Ceramics (Bangladesh) Ltd. Retrieved from
http://rakcerambd.com/investor-annual-reports.php

Appendix

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