Assess supply market

Strategic location
From Price Information Exhibit we can say that average cost of procurement is lowest in
Maharashtra(Kolhapur) and Karnataka. Strategic location of Mango plant is in Kolhapur only.

Objective:
1. To reduce the lead time from 2 days to 1 day by expanding the supplier base and reducing the
supplier’s risk.
2. Increase credit period from 7 days to 45 days.

Strategic sourcing approach:

A mix of Relational Restructuring and best price evaluation approach can be used for strategic sourcing
since Mango is a new entrant, wanted to enter into the highly competitive market with major player like
Mondelez, Nestle and Ferrero. Another factor of consideration was quality aspects for which criteria for
selection of supplier were based on 4 criteria:

1. Proximity to plants
2. Supplier’s financial standing.
3. Innovation capabilities.
4. Pricing attractiveness of the region.
5. HACCP certification and quality standard.

Supplier Analysis
Potential supplier from the case were Olam, EID Parry, Sakti Sugars, Bannari Amman, Renuka Sugars.

Cost-benefit Analysis of EID Parry

benefit Incurred are:

1. Proximity to plants: The supplier has production plant in Tamil Nadu, A.P, Karnataka states at
location NELLIKUPPAM, PUGALUR, PETTAVAITHALAI, SIVAGANGA, BAGALKOT(Karnataka),
HALIYAL(Karnataka), RAMDURG(Karnataka), SANKILI (A.P)
2. Supplier’s financial standing: The supplier financial is financial stable since its Debt-Equity ratio
has been reduced and due to increase in operating income
(Source:https://www.moneycontrol.com/financials/eidparryindia/consolidated-ratios/EID).
Subsequently, quick ratio has been increased due to increase in cash balance.
3. Innovation capabilities: The supplier has innovation capabilities since the sugar manufacturers in
India lack a dedicated R&D wing and cane breeding programme, But EID parry have many
innovative programmes in sugarcane cultivation methods have set industry benchmarks in yield
and recovery. It runs a R&D center for sugarcane and tissue culture to develop new and
improved cane varieties.
4. HACCP certification and quality standard: The supplier is HACCP certified and meets required
quality specification.
Cost Involved are:

1. Low Bargaining power since the supplier is well established and also it has significant market
share in sugar production industry.
2. Bargaining power in negotiations with such a big player can become a key challenge.

Cost-benefit Analysis of Sakti sugars.

benefit Incurred are:

1. Proximity to plants: The supplier has production plant in Tamil Nadu located at Sakthinagar,
Sivaganga and Modakurichi and one plant in Orissa at Dhenkanal.
2. Supplier’s financial standing: The supplier financial is financial stable since its Debt-Equity ratio
has been reduced and due to increase in operating income
(https://www.moneycontrol.com/financials/sakthisugars/profit-lossVI/SS#SS). Subsequently,
quick ratio has been increased which means they are more liquid.
3. Innovation capabilities: The supplier has innovation capabilities since it got Special Award for
manufacture of Superior Quality Export Sugar in 1992-93. Also, in 2007-2008 it got Best Sugar
Factory Award for Highest Cane Crushing.
4. HACCP certification and quality standard: The supplier is HACCP certified and meets required
quality specification.

Cost Involved are:

1. Low Bargaining power since the supplier is well established and also it has significant market
share in sugar production industry.
2. Bargaining power in negotiations with such a big player can become a key challenge.

Cost-benefit Analysis of Bannari Amman

benefit Incurred are:

5. Proximity to plants: The supplier has production plant in Tamil Nadu, Karnataka states at location
at Erode,Mysore, Kollegal, Tiruvannamalai, Villuppuram
6. Supplier’s financial standing: The supplier financial is financial stable since its Debt-Equity ratio
has been reduced and due to increase in operating income
(Source:https://www.moneycontrol.com/financials/eidparryindia/consolidated-ratios/EID).
Subsequently, quick ratio has been increased due to increase in cash balance.
7. Innovation capabilities: The supplier has innovation capabilities since the sugar manufacturers in
India lack a dedicated R&D wing and cane breeding programme, But EID parry have many
innovative programmes in sugarcane cultivation methods have set industry benchmarks in yield
 and recovery. It runs a R&D center for sugarcane and tissue culture to develop new and
improved cane varieties.
8. HACCP certification and quality standard: The supplier is HACCP certified and meets required
quality specification.

Cost Involved are:

3. Low Bargaining power since the supplier is well established and also it has significant market
share in sugar production industry.
4. Bargaining power in negotiations with such a big player can become a key challenge.

Price trend analysis of your benchmark quality market and reasons for variations In other words, what
are the agronomic, economic, political and social factors that affect commodity prices

•Knowing global and Indian production and use and net in pipeline for carry forward (S&D)

•Correlate weather events with crop calendar( area sown/pests and diseases)

Understand factors affecting farmer intention to sow like MSP and subsidies to industry, export and
import duties that finally lead firms to:

•buy in a certain fashion from farmers either benefitting them or otherwise;

•make byproducts to profit maximally and or store accordingly

•e.g. convert butter to ghee; sugar SAP and MSP; subsidy to milk producers by Karnataka govt

The story of Indian Edible Oils…

Source: Dorab Mistry, Globoil, 2018

Edible oils is expected to post a CAGR of 9% at 2017 constant prices attributed primarily to the growing
population, rising nuclear families & increasing usage of edible oils in cooking

Source: Euromonitor,