Akij Poly Fibre Industries Ltd.

Value Chain Management Process

Letter of Transmittal
28 March, 2011 Mr. Shawkat Kamal Course Instructor Business Strategy BRAC Business School Sub: Submission of term paper. Dear Sir, It is our pleasure to submit the term paper on Value Chain Management Process of Akij Poly Fibre Industries Limited as a part of our course of Business Strategy (MGT 401). We enjoyed preparing this term paper, which help us to enrich our knowledge of the theoretical concept. We tried to reflect the practical operational aspects of the manufacturing industries, which is complementary to the theoretical lesson. We are very glad that you have given us the opportunity to prepare this term paper and gather some new and very important knowledge. We hope that this will meet the standard of your judgment. Faithfully Yours, Sabrina Safa (ID-07104087) Sharmila Gupta Partho Kumar Mohonta (ID- 08304103)

Acknowledgement
Our purpose of the report is to know the value chain process of Akij Poly fibre industries. For these purpose we needed many resources to get the full information. We are a group of five members and without the help of others it is not possible to make the report done. In every step of this study, many individuals and institutional experts supported us. We respect them wholeheartedly and gratitude them for their inspirational help. At first we would like to respect our honourable Lecturer, Shawkat Kamal, BRAC Business School, BRAC University for giving us the opportunity to learn about the value chain process, specially the production process of Akij Poly fibre industries and also thankful for his continuous help when we get any problem, he was always there. Second most importantly we also thankful to the DGM of Marketing Mr. Jasim Uddin, Factory Manager- MR. Jahangir Hossain who gave us the permission to visit the factory. Our special thanks to Assistant manager Mr. Mashudur Rahman who gave his valuable time to let us know the whole production process of the factory. At the end of our acknowledgements we want to give warmest thanks to our group members without whom this team effort cannot be successful and end of the report each and everyones work has been appreciated by all members.

Executive summary
Poly fibre industry is one of the most newly emerged sectors in Bangladesh. This sector has been developed in our country depending on the cement industry. But, most of the time, it is considered as a backward integration for our growing cement industry. The necessity for this industry has been realized after 1990s from the time cement industry started to develop: before 1990 there was no poly fibre producing company in Bangladesh and then cement was imported from China. In 1990, Poly Fibre industries first produced double-ply bags for cement processing in which a craft paper was attached inside the bag for protecting the cement from moisture. But double ply bag could not protect the cement from outside dust that much. To solve this problem in 2003 Shah Cement first introduced the single-ply bag. But commercially Akij Poly Fibre industries introduced it to the market. Now a days, demand for poly fibre bags are growing rapidly with the market for cement especially in the developing countries. The main specialization that makes the Akij Poly fibre bags better than the others is its outlook and shape. Akij also dont use fly ash that some other companies use. There is a dimension for the bag where they strictly maintain strength, shape and color for the bag. For the operation of poly fibre three basic elements are needed. The virgin material is considered as poly propylene which is imported from UAE, Australia, Korea and also Dubai. This poly propylene is a by product of petroleum. After that the second core material is used is calcium carbonate which is used for the better strength of poly fibre.

The operation process has six steps. The first step is called Tapeline. The operation process starts with making yarn by mixing the three materials- Poly Propylene, CaCO3 and Master Beige. For the operation they bought a machine Star EX from the company Star lingers. In the next part the tape bring into the Loom department, where the yarn sew through knitting machine. Then the fabric comes out with a shape of tube. Thirdly, lamination is very important process for protecting the cement from outside moisture and strengthens the bag. Lamination specially has done with poly propylene and LDPE in coating machine. Fourthly, printing steps comes where

the factory use the printer named Dina flex which has been specialized for Flexo printing. Here they use water base printing with low ink consumption. After that, in the fifth step every part of the bag is attached in the machine of Roll slitter by giving hit of 650 OC. finally in the sixth step it is called Sack press. Here, the bags the taken into a bunble and then it s sent into the cement side for pouring cement. The operation process is finished here.

After that we came to know about the competitors. There are so many competitors of Akij Poly fibre in recent time. Many companies are starting produce Poly fibre bags for cement. The main competitors of Akij Poly fibre industries are Shah Cement, Bengal group, Tiger Brands, Global by Meghna group, MDC by Madina group and very recently Bashundhara group also starting this business. After that comes the marketing and distribution process of the company. Akij Poly Fibre Industries dont have any specific distribution channel. They go directly to the buyers to sell their product. They go to every potential buyer and show the advantages of their product by showing samples. They mainly target the cement producing company in Bangladesh only. Akij Poly Fibre Industries dont do that much advertisement. They advertise their product through their marketing people. The Marketing people go to the buyer directly and show their product. They always try to give the best services to the customer. To ensure the service quality they call their buyers by their own. These are the total value chain process of Akij Ploy fibre. They are operating fully automated factory which has both positive and negative side.

Table of Content

Chapter No. 01 02 03 04 05 06

Chapter Name

Page No.

01

Introductio n

Poly fibre industry is one of the most newly emerged sectors in Bangladesh. This sector has been developed in our country depending on the cement industry. But, most of the time, it is considered as a backward integration for our growing cement industry. The necessity for this industry has been realized after 1990s from the time cement industry started to develop: before 1990 there was no poly fibre producing company in Bangladesh. In 1990, Poly Fibre industries first produced double-ply bags for cement processing in which a craft paper was attached inside the bag for protecting the cement from moisture. But double ply bag could not protect the cement from outside dust that much. To solve this problem in 2003 Shah Cement first introduced the single-ply bag. But commercially Akij Poly Fibre industries introduced it to the market. Now a days, demand for poly fibre bags are growing rapidly with the market for cement especially in

Objectives
the developing countries.

Our main purpose of preparing the report is to have some knowledge on poly fibre industrys total value chain process which is actually quite new for us. Moreover, we want to introduce with: The production process of poly fiber.
The ingredients or materials use to make this product.

The distribution & marketing strategy.

02

Methodology
Our main report is to know about the total value chain process of Akij poly fiber industries and mostly the operation process because it emphasizes more on operation. For these reason we collected data from various sources. First we collected primary data from the head office of Akij Group, 73, Dilkusha C/A, Dhaka-1000 by an appointment with Mr. SK Jasim Uddin who is DGM of marketing of Akij group on 22nd March. We went there with a permission letter from BRAC University assigned by our course instructor Mr. Shawkat Kamal and they approved it and we got permission to meet Mr. Zahangir Hasan who is a factory manager of Akij Poly Fiber Industries and to visit the factory. We got permission to visit the factory on 24th March, 2011 at 3:00 pm. On the assigned date we all group members started from our BRAC University campus on a Micro Bus at 1:00 pm. We were a little late to start due to our makeup class. There were a huge traffic jam and thats why we were also late and on the way we took gas from CNG Station. That time we had little snacks from a food corner beside the CNG station. However, it was not that difficult for us to find out the location and the factory road was so good. After reaching there we came to know that some days before our Prime Minister Mrs. Sheikh Hasina inaugurated this road. Then at 3.30 we reached at the factory and there we signed on the visitors book and sat on the cabin of Mr. Zahangir Hasan. Then we were served snacks with Mojo cola and we waited. They delightfully offered lunch. We waited there for about 30 minutes as the appointed persons were too busy. After taking snacks we met Mr. Zahangir Hasan and Mr. Mashudur Rahman. Mr. Mashudur Rahman who is the assistant manager gave us his valuable time and discussed the total value chain of Akij Poly Fiber Ind. Ltd. and also answered our queries. From this discussion session we collected our most of the information. After finishing the discussion we went to the factory at 5 p.m with him. It took one and half hours to visit the whole factory. He was that much energetic person because he showed us each and every step of the operation
03

with lots of patience to understand the whole process of production. After the visit we

had tea & biscuits, took some snaps in front of the factory and started for our home at 7:00 pm. And reached at home around 10 p.m. However, Mr. Zahangir was too busy and he was not in his cabin and thats why he could not give us time. Besides our visit, Mr. Mashudur Rahman gave us other relevant information by e-mail later on.

Limitation
We have faced the following limitations while preparing our report: We cannot take pictures inside the production area due to some restrictions of the company. We have some problem in understanding some mechanical terms as we were not quite acquainted with this industry.
Due to the companys policy we cant get some information regarding pricing and

other issues.

04

05

Company Overview
Akij Poly Fiber Ind. Ltd. is one of the sister concern of Akij Group. Akij Group has a family oriented business founded by Late Sheikh Akij Uddin. As mentioned before, it is considered as the backward integration for Akij Cement Ltd. Basically, Akij Group started in late 1940s with Jute mills. Later on, its business segment started to increase and at present total business sector is 22 (twenty two) like Akij Jute Mills, Akij Bidi, Akij Food & Beverage, Akij Cement, Dhaka Tobacco, Akij Textile and others. In the current year Akij group has launched another two business sectors; they are- Akij Ceramics & Akij Melamine. There are about 100000 people working in various sectors of Akij group. Akij Poly Fiber Ind. Ltd. started its operation in 2009. It produces only single ply bags for Akij Cement and above mentioned clients. It has only one factory situated in Nabiganj, Kadam Road, Narayangong. The distribution & marketing activities also operated from its factory mainly.

06

Product profile

Akij Poly fibre Industries mainly produced the single-ply bag for cement. Single-ply Bag produced with some specialization that helps to protect cement from outside moisture. Because, outside moisture can hamper the cement. The main specialization that makes the Akij Poly fibre bags better than the others is its outlook and shape. Akij also dont use fly ash that some other company use. Dimension: Width- 390mm in the middle & 110mm in two sides. Length- 610mm-630mm Strength: Normally this type of regular single-ply bag can afford 4 to 4.5 kg normal weight where Akij bag can afford 5.5 to 6.0 kg weight which elastration ability is 25 kg which has extreme strength to resist in 10 to 15 hands of delivery to its ultimate user. Elasticity: Standard elasticity of poly fibre maintained by AKIJ is 22-25 Newton. Colour: Colours depend on the customer demand. But we found them to produce specially two colours- golden & White. Shape: Shape also depends on the customer demand. But they suggest the buyers about bag shape according to their demand. But the specialization of Akij Poly Fibre Industries is producing brick shape bag which is modern and good looking.

07

Price Comparison
The company has many competitors in market now and they maintain a high policy. For this reason they do not reveal their price rate to anyone. But normally their price rate is between BDT 15- 18 per bag. Different company charges different prices and also charge low price so we cant get specific idea of their pricing, rather a range of price.

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Procurement
For the operation of poly fibre three basic elements are needed. The virgin material is considered as poly propylene which is imported from UAE, Australia, Korea and also Dubai. These poly propylene is a by product of petroleum. In Saudi Arab, one of companies named SABIC is doing the job of bringing these polypropylene from petroleum. They are involving almost 35 million workers in operation and in processing of bringing these polypropylene. This polypropylene they get from the upper level of petroleum. After that the second core material is used is calcium carbonate which is used for the better strength of poly fiber and thirdly master beige which is light brown element and is used for the color when color is needed. At the time of coating, secondly LDP (Low Density Poly propylene) is used for better strength. Raw Materials: Poly Propylene, CaCO3, Low Density Poly Ethylene (LDPE) and Master Beige Yarn color.

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Operation
Tape Line: The operation process starts with making yarn by mixing the three materials- Poly Propylene, CaCO3 and Master Beige. For the operation they bought a machine Star EX from the company Star lingers. This machine has 3 different compartments for yarning. First there is a parameter is used to measure quantity of materials. After that through the tape line 3 materials is mixed together through melting and a sheet is made. Then a blade is used to filter the dust and after that it is put into cold water of 20 degree centigrade to make it stronger. After that it enters to a well protected oven to make the sheet smooth and elastic by giving hit of 390 degree centigrade. Then finally the yarn comes out in form of bobbin.

Loom: In the next part the tape bring into the loom department, where the yarn sew through knitting machine. Then the fabric comes out with a shape of tube. Then the tube shape fabrics cut into three different shapes in three different machine.

Lamination: Lamination is very important for protect the cement from outside moisture and strengthen the bag. Lamination specially has done with poly propylene and LDPE in coating machine. LDPE specially use pasting the bag to make the bag strong. Printing: The name of the printer is Dinaflex 4 which specialized for flexo printing. They use water base printing with low ink consumption. Firstly they paste the required design in a mold. Then the mold put into a slender. Then the fabrics roll into the fabric roll. Then different parts of
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the bags print differently. Then the fabric roll again into a fabric roll. The machine print through Anilox roller which has 80 whole per cm thus the print can be done with high longevity. In the Anilox roller there is ink chamber in which ink controlled by a bled. They use Doctor Grade Cut ink, which make the printing colour from their competitors. After printing they do Corona treatment to increase the longevity with 24000 voltages. There is a laser ray safety around the machine. There are two cameras, one inside the printing machine and one outside the machine to observe the machine works. Roll Sliter: After printing the different parts of fabric start rolling in different slinder.

Ad*Star kon 60: In this stage all the different part join together through a machine. The machine needs 650OC. There are 2 lines in the machine to join two sides of the bag. There are five different parts join together. After joining all the parts together the machine make two wholes in the entrance place. Here the finished bags come out from the machine. Before making bundle of the finished product group of workers give the sill for date on the bags. Sack Press: In this step workers make bundle of the finished bags. There are maximum 200 pieces of bags in a bundle. Truck loading: The final steps is to load the truck with finished product.

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14

Distribution

Akij Poly Fibre Industries dont have any specific distribution channel. They go directly to the buyers to sell their product. They go to every potential buyer and show the advantages of their product by showing samples. If the buyers convinced to take product from them they can give orders. To give the orders buyers have to pay the price first to ensure the order. After getting the orders they start production. After completing the order they first clear VAT for all the finished goods. Then they send the order to the ordered place at time.

Marketing process
Target Customer: They mainly target the cement producing company in Bangladesh only. Before they sold their products to MTC, Bashundhara cement, Rubi Cement, Premier Cement and their number of sold was 45lacs begs per month. But now they only sale their products to Scan Cement, Crown Cement and Lafars Cement and now they sale about 30lacs bags per months. But they have a plan to export the foreign customer in future. Competitors: There are so many competitors of Akij Poly fibre in recent time. Many companies are starting produce Poly fibre bags for cement with the huge demand for the fast growing cement companies. The main competitors of Akij Poly fibre industries are Shah Cement, Bengal group, Tiger Brands, Global by Meghna group, MDC by Madina group and very recently Bashundhara group also starting this business. Advertisement: Akij Poly Fibre Industries dont do that much advertisement. They advertise
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their product through their marketing people. The Marketing people go to the buyer directly and show their product and describe its advantages and also describe how the product is better than the others. Services: They always try to give the best services to the customer. To ensure the service quality they call their buyers by their own. They call the customers to know that are they satisfied with their product or not, are they facing any problems. They also give after sales services directly going the customers place.

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Supporting Activities
Research & Development: Poly Fibre bags are something that actually doesnt need any
special development. They just try to development in processing thus they can reduce wastage in production and the breakdown at work.

Labour Management: In Akij Poly Fibre there are a total of 208 labours at present. Among
them 125 labours are permanent, 36 are non permanent 35 are daily labours and 12 labours are to be appointed. Working hour- Working hour is 8 hours per shift. There are 3 shifts a day. Requirements The labors working there must have to be 18 years and above. The must be HSC passed. Training- Akij Poly Fibre Industries arranges in house training for their labours.

General Administration:
As Akij Poly Fiber is very small business segment of Akij Group, it does not have any complex hierarchy. On the top of the organization Akij Poly Fiber have chairman. Beneath chairman they have a managing director. There are two directors who are working under the managing director. Akij Poly Fiber is under supervision of a factory manager and one assistant Manager (Production). The factory manager directly reports to the Managing Director. The HR of Akij Poly Fiber is supervised by one Deputy Manager. Marketing activities is managed by the Marketing & Sales department of Akij Cement. In this department, there is a Deputy General Manager. However, distribution & logistics of Akij Poly Fiber is operated from the factory under supervision of the factory manager. All accounts issues are handled by the accounts & finance

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department of Akij Group under a small sub-department for Akij Cement & Poly Fiber.

Administration of Akij Poly Fibre Ind. Ltd. Chairman (Mr. SK Nasir Uddin)

Managing Director (Mr. SK Bashir Uddin) Director (Mr. SK Shamim Uddin) Director (Mr. SK Jamil Uddin)

Deputy Manager, HR & Admin (Mr. SK Jafor Uddin)

DGM, Marketing (Mr. SK Jasim Uddin)

Factory Manager (Mr. Zahangir Hasan)

Accounts Department

Asst. Production Manager (Mr. Mashudur Rahman Khan)

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Appendix
Process Diagram
Tape Line
Input
PP,CaCo3 & Master Beige (Color)

Loom
Output Input Tape (In form of bobbin) Output Fabric (Meter)

Tape (In form of bobbin)

Printing
Input Fabric (Meter) with coating, Red/Blue ink, Thinner, Accelerator, Reterder etc. Output Printed Fabric (Meter)

Lamination
Input Fabric ( Meter) Output Fabric (Meter) with coating

Roll Slitter
Input Printed Fabric (Meter) for top/bottom/valve. Output Roll (Pieces) for top/bottom/valve

AD*STAR KON 60
Input Printed Fabric (Meter) for body, top/bottom & valve Output Finished Bag (Pieces)

Please see the next page

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From the bottom of the previous page

SWOT Analysis
Strength

Sack Press
Output Compressed Bundle

Input Good quality product After sales service Finished Bag (200 Pieces in a bundle) Commercially first mover

Very good manufacturing plant (Automated machines) Opportunity Global Market New comers in Bangladesh (Cement producing companies) Weakness Over price Lack of efficient labor Poor management/inefficient management They have no well developed website Ni advertisement and well developed marketing plan Threat Local competitors (Cement companies are coming with their own poly fibre plants) Threat if latest technology

Truck Loading

Fully automated machines- so hard to find mechanical lickage if there is any problem.

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