1. Introduction
PRAN-RFL is a conglomerate company. It is the largest agro food processor and food exporter of Bangladesh. PRAN is one of the most admired food & beverages brand among the millions of people of Bangladesh Ban gladesh and an d other 106 countries of the world where PRAN products are a re regularly being exported. Their view is to create more employment to eliminate poverty. Their target is to make their product available to every corner of our country so, every customer get the right to consume. All the PRAN products are produced as per international standards maintaining highest level of quality at every stages of its production process. Still there is criticism about their products. They have their selected target market and dissatisfaction about the quality sometimes arises from the targeted market. PRAN is currently producing more than 200 food products under 10 different categories i.e. Juices, Drinks, Mineral Water, Bakery, Carbonated beverages, Snacks, Culinary, Confectionery, Biscuits & Dairy. The company has adopted ISO 9001 as a guiding principle of its management system. The company is complaint to HACCP & certified with HALAL which ensures only the best quality products are reaches to the consumers table across the Globe. PRAN has a renowned name around the globe but it is about its own people, own country people give negative reviews. Truth is that not everything is positive; there are both pros and cons. Though PRAN is globally famous but in Bangladesh every people thinks twice before buying their Product or when they are left with no suitable options they buy PRAN products. So overall, PRAN has a neutral review about their products.
1.1 History:
Actually PRAN was formed in 1980 by present CEO mej. G. (rtd.) Amjad Khan Chowdhury & RFL was founded in 1980. In 1981 they were merged and started their group named PRAN-RFL Group. PRAN started its operation as a processors fruit and vegetable in Bangladesh. Keeping in view the corporate mission of the Group they have over the years diversified their activities in
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several areas. PRAN's biggest asset is their competent team of hands-on managers and dedicated employees. PRAN is Bangladesh's largest grower and processor of fruits and vegetables. Their contract growers cultivate the choicest fruits and vegetables, which are processed in their modern and hygienic factories to highest quality & international standards.
1.2 Mission:
Poverty and hunger are curses so their mission is “To generate employment and earn dignity and self-respect for our compatriots through profitable enterprises”.
1.3 Vision:
PRANs‟ vision is “improving livelihood”.
1.4 Achievements:
PRAN has been awarded numerous trophies in home and abroad for excellence in export market including product development, market development etc. In recognition of contribution towards earning foreign currency, PRAN achieved “Best National Export Award” for 8 consecutive fiscal years (FY 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2007-08, 2008-09, 200910, 2010-11). In recent times, PRAN is awarded “UDC BUSINESS AWARDS 2011” as the best food & beverage products manufacturer in Malaysia. The awards are welcome but if there is one thing that truly inspires every member of PRAN … it‟s a vision to become the leading globally integrated agro based Food Company by improving livelihood.
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2. Analysis
2.1 SWOT analysis: In Bangladesh PRAN-RFL is one of the most successful company as well as organization. This group is trying to achieve a good position in local and global market. So, they have to analyze the SWOT matrix. SWOT analysis is a planning tool used to analyze an organization‟s STRENGTH, WEAKNESS, and OPPORTUNITIES & THREATS. Strength and weakness are organizations internal factor. Opportunities and threats are organizations ex ternal factor. Now the SWOT analysis of PRAN-RFL is given below: 2.1.1 INTERNAL STRENGTH:
- Risk pooling factor. - Large company and organization. - Experiences. - Superior source of finance. - Better control over sources and raw material. - Financial support - Vast distribution network. - Good reputation. 2.1.2 INTERNAL WEAKNESS:
- Unequal promotions strategy. - Lack of first mover‟s advantages. - Lack of good control - A lot of distance and a huge amount of transport cost. - Internal promotion.
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- Internal media planning. - Unpreserved item - Limited product range. 2.1.3 EXTERNAL OPPORTUNITIES:
- Demand in global market. - Large demand in local market. - Domestic natural resources. - Cheap labor. - Ethnocentrism - Government incentives. - Cash incentives. - Vat. 2.1.4 EXTERNAL THREATS:
- Huge competition. - Competition in market price. - Lack of benefits. - Strict health and technical standard. - Changing choice of customers. - Foreign competitor. - Weak distribution. - changing market.
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3. FROOTO 3.1 Introduction of Frooto
Frooto was launched in Bangladesh in 2007 as refreshing mango juice & quickly went on to become the leader in juice category market. Since launching of Frooto, consumers fall in love with its unique taste & packa ging. With new pack graphic & clutter breaking communication, Frooto created a strong & powerful appeal among the target group of people.
With the launching of “Mango & it‟s future” campaign in 2009 it‟s winning taste & unique communication Frooto created a great deal of excitement in its category and celebrated the indulgence in mangoes like no other brand have done before. While other players have portrayed mango as a simple & innocent fruit juice, Frooto made its “synonyms of mango”. As Bangladeshi consumer had a mango mania & desire to have mango round the year so it was rather easier for us to reach consumer insight to have a good appeal about the product Pran Frooto is the first ever fruit juice in Ban gladesh that symbolize the Youth , Fun and the Real Taste of Fruit.
3.2 What type of product is Frooto:
Frooto is a functional product .Functional products are those products which does not change much over time, such product satisfy basic needs and have predictable, stable and long life cycle. This stability in the demand brings competition in the market. So, thus such products have a low profit margin. There is not much change in this product so this is not an innovative product. Innovative product has new additive features with the existing product. This can attract more customers and can increase the profit margin. Product Type: Frooto is a functional product.
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3.3 Characteristics of a functional product: I. II.
Product life cycle more than 2 years Contribution margin between 5% to 20%
III.
Product variety is low
IV.
Average margin of error in forecast 10%
V.
Predictable demand for product
VI.
Average stock rates 1% to 2 %
VII.
Average forced markdown 0%
VIII.
Lead time required for made to order is 6 months to 1 year
We found Pran Frooto matching all the criteria and thus concluded that it is a functional product. In 2007, Pran launched a new product named „Frooto‟ in the growing juice market and rapidly it became the market leader then, because of its unique taste and features. With the launching of “Mango & it‟s future” campaign in 2009 it‟s winning taste & unique communication Frooto created a great deal of excitement in its category and celebrated the indulgence in mangoes like no other brand have did before. While other players have portrayed mango as a simple fruit juice, Frooto was a “synonym for mango”. As Bangladeshi consumers had the desire to have mango round the year, it was rather easier for PRAN to reach consumer insight to have a good appeal about the product.
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3.4 Methodology
We did a small survey to gather knowledge about what customers think about Frooto. •
Study Design- A cross-sectional survey using interview method.
•
Target Population- Random chosen.
•
Participants- 75 people at different stage.
•
Instruments- a) Objective questionnaire.
b) Secondary data Analysis: Qualitative analysis.
We have gathered data regarding our studies in 2 stages. At first, we have collected data through nd
personal interview and in 2 phrase we have made the paper through some secondary data about Frooto. And then we talked to PRAN authorities. We wanted to talk to someone in the management level, but they evaded this, time and time again. So we talked with their "media" section and we talked with a third party distributor of PRAN and an employee of a PRAN showroom in Mohammadpur.
3.5 Study Limitation
There was one main limitation in work with Frooto, which was PRAN‟s unwillingness to communicate at all, let alone talk to us about the strategies.
3.6 Strategy used:
An efficient supply chain should be build for a functional product like Frooto. As the demand for functional product remains same over time the companies typically have the good sense to stick with efficient chain. As far responsiveness is concern Frooto is a very responsive product. Frooto is available in most of the stores where there is a demand for the such kind of soft drinks. Pran has managed its availability quite will as Frooto con tributes to a large portion of Pran‟s revenue.
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3.7 Physically efficient process
Primary purpose- Supply predictable demand efficiently at the lowest possible cost.
Manufacturing Focus- maintain high average utilization rate
Inventory Strategy- generate high turns and minimize inventory throughout the chain.
Lead time focus- shorten lead time as long as it does not increase cost.
Approach to choosing Suppliers- Select primarily for price and quality
Product design strategy – Maximize performance and minimize cost.
4. Current Supply Chain of PRAN Frooto
PRAN being one of the largest food and beverage producers of South Asia, has a very effective supply chain in terms of cost effectiveness and availability. The fruit juice category is PRAN‟s most profitable sector. It is their cash cow and therefore it has to be effective and remain profitable. Through our interview with the representatives at the PRAN-RFL center, we got a vague idea about their supply PRAN has been using the traditional supply chain structure more effectively than any other company in Bangladesh. Their supply chain structure is depicted below:
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Suppliers
• •
Raw Materials Fruits and Vegetables
PRAN-RFL
•
•
Production Plant Warehousing
Distributors
•
•
Third Party Distributors PRAN's Own Transportaion
Retailers
• • •
Customers
Super Shops Retail Stores Small Local Stores
F igure: Supply Chain Structure of PRAN’s Fruit Juice SBU
So, as we can see it is the most basic supply chain structures we know of. Yet PRAN has been able to manage it efficiently to the point that no competition can come close to cost effectiveness and availability in the market. PRAN takes the market by storm and provides incentives to retailers to fill their shelves with PRAN products. This is their basic strategy in most of the profit making SBUs as well as fruit juice category.
4.1 Suppliers
PRAN has a number of suppliers both in the urban and rural areas of Bangladesh. PRAN brings in raw fruits and vegetables needed to produce the main components for Frooto from various suppliers all over the rural areas of Bangladesh. These suppliers are basically Aratdaars indifferent rural haats. PRAN procures other components such as food colors from various suppliers in Dhaka city.
4.2 PRAN-RFL
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Most of PRAN‟s production work is done in PRAN‟s own production plants located in various places in Bangladesh. Some of the biggest production plants of PRAN are located in places mentioned below:
Ekdala, Natore Ghorashal, Norshingdi Kaliganj, Gazipur Adamjee, EPZ Rupganj, Narayanganj Kellabondh, Rangpur
PRAN also outsources their production at times when the demand is too high for them to handle. They have a list of carefully selected producers who are trusted, and have given them their recipes and packaging materials. When demand cannot be handled by PRAN‟s own production capabilities, a portion of the manufacturing is outsourced to these producers.
4.3 Distributors
PRAN has the strongest and fastest network of distributors operating all over Bangladesh and even in the most remote areas of the country. PRAN has over 15000 distributors operation in different locations of the country. Besides these PRAN also has its own transportation system of covered vans that they use when they deem necessary. These 15000+ distributors ensure an impenetrable network of distribution and provide unrivaled availability in the marketplace.
4.4 Retailers
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PRAN sells its products to all kinds of places from high end super shops to local tea stalls and everything in between through these distributors. Therefore all types of potential customers are served. This is a prime example of how if supply chain is efficiently used, it can make market leaders.
4.5 Supply Chain D ri vers of PRAN F rooto
To understand the supply chain of any product properly, one must understand the operations or the flow of its supply chain drivers. In our interview with the representatives at PRAN-RFL center we asked them some questions regarding these drivers that drive the supply chain of PRAN Frooto. Through these questions we have come to an understanding as to how the supply chain drivers of PRAN Frooto works.
4.5.1 Facilities
Facilities refers to production locations and warehouses. As mentioned before PRAN has various productions facilities strategically located all over the country. These facilities also double as storage locations. These storage locations are strategically considering the cost of production, transportation, materials and most importantly near major markets. This is what allows PRAN to provide responsive service to the market allowing high levels of product availability.
4.5.2 Inventory
For PRAN Frooto is a cash cow, it‟s a fast moving good with high demand. PRAN focuses on maintaining high level of availability in the market for Frooto. This is why PRAN keeps a decent amount of inventory in their warehouses. They are trying to minimize inventory of Frooto to cut costs but still they are forced to maintain an av erage amount of inventory. The dealers or distributers also keep a low amount of inventory of Frooto in their storage facilities. Though it adds a little to the cost the wide availability and sales offsets these costs.
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4.5.3 Transportation
PRAN has its own transportation but the generally the distributors use their own transportations to load Frooto and distribute them. PRAN uses its own transportation to supply products to a few super shops and in special cases when they deem necessary.
4.5.4 Sourcing
Sourcing for the raw materials for Frooto is basically done from all over the country. The fruits and vegetables are collected from Farias or Aratdaars in different rural areas of North Bengal. The food colors and other chemicals necessary are sourced from various suppliers in Dhaka.
4.5.5 Information
Demand and order information for Frooto flow upstream in a very traditional. The orders are collected from the retailers by the distributers and are placed using paper invoices. These orders are then placed to PRAN-RFL offices again in a traditional manner using invoices. After the processing of orders the distributors pick the products up from the PRAN warehouses located near them. Unfortunately we were not able to uncover in a concrete manner whether they use any ERP or not, but what we got from the conversation with the representative was the do forecast demand using some sort of computerized manner.
4.5.6 Pricing
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The pricing strategy of Frooto is simple. It is a cost based pricing strategy. PRAN tries to cut their prices as much as possible without harming the quality. We talked to one of the distributors of PRAN and they gave us an estimate of PRAN Frooto‟s pricing. Stage In the Supply Chain
Price
of
250ml
Pack
Price of 1L Pack (Tk/Unit)
(Tk/Unit) Distributors
15 - 17
50 - 55
Retailers
18 - 19
61
Customers
20 - 22
70
Figure: Estimated Unit Price for 250ml and 1L Packs of Frooto Distributors and Retailers are also given incentives in terms of price discounts to buy in bulks. This is how the drivers of the PRAN Frooto‟s supply chain operate. Overall it is responsive supply chain and it has proven very effective so far. But there are still some things to consider and room for improvement. These are going to be shown in the later part of the report.
5. Defamation of Pran Products
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We all know that Pran is a renowned company in Bangladesh, but this renowned company has lots of faults in their products. Quite recently The Bangladesh Standards and Testing Institution (BSTI) has cancelled the licenses to make fruit-flavored drinks of Pran, for not using the minimum 10 percent fruit pulp in the drinks. They were given time frame for the restoration process but they failed to comply with the deadlines according to BSTI Fruit juice must contain 88 percent pulp, while fruit drink has to contain a minimum of 10 percent fruit pulp. This is very bad of the health. The standard body cancelled the licenses of Pran's mango, orange, lemon, strawberry, litchi, apple, pineapple and fruit cocktail drinks for not using the minimum 10 percent fruit pulp, Md Nurul Islam,
BSTI's
deputy
director
for
certification.
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The US Food and Drug Administration in a press release on Oct 8 last year said the product's importer Asia Cash & Carry Inc.
of
Maspeth,
New
York,
is
voluntarily recalling jars of PRAN‟s turmeric
powder.
Primary testing of the 250 gm jar of turmeric powder found it contained 28 parts per million (ppm) of lead after sampling by New York State Health Department and in private laboratory testing. And similar other results were found from different laboratories PRAN turmeric powder in 400g packets has found to contain 53 ppm of lead. Lead can accumulate in the body over time. Too much of it can cause health problems, including delayed mental and physical development and learning deficiencies. Pregnant women, infants and young children especially should avoid exposure to lead. So this is what Pran is actually doing in the domestic and international market. Recently one consumer of the turmeric powder complained on falling sick, prompting the testing of PRAN‟s product. Then we also found that is pran is not producing quality products to the consumers even many consumers have reported that they have found parts of insect inside the packets of Pran Masala. Pran is not very health conscious because they don‟t recall the expired products from the market so once a customer opened a packet of masala everything is rotten and causing a bad odor. Very recently one customer posted a photo in Facebook, which shows that there were dead insects inside the Pran Hot Tomato Sauce. So this is what the renowned Pran Company is giving us with their products.
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6. Our Findings
We tried to gather knowledge about PRAN from two sources. The company itself, and the general consumers. The two sources gave us absolutely different reviews. As it has already been mentioned in our limitations, they were not helpful at all, not ready to divulge anything. And what they said is so not what the reality is like. Directly quoting from the website, “ At PRAN, we believe you should enjoy what you eat and still live a healthy life. That’s why we are dedicated to make the food people love even better. And we’re supporting programs and partnerships that help to educate and induce people to make healthful choices.” What a contradiction from the reality. There were so many incidents where the quality of PRAN got questioned, both nationally and internationally, everyone avoids PRAN products now. No matter what PRAN says, they are well aware of the situation. They have stopped using their logo and brand name into many of their latest products, like the butter buns and honey comb buns they sell, under the name “Alltime”. Many people are in the dark about it. They are even selling the same product under a different name and packaging, which is the case for the product we are working on, Frooto. There‟s a new mango juice in the market, Sundrop Mango Fruit Drink, which is basically Frooto, in a different name and packaging. They are even concentrating more on catching the Indian market, as they lost the Bangladeshi one, and very dramatically so, and now many PRAN advertisements can be seen if you go through some Indian channels like Zee TV and Zee Bangla.
7. Recommendations
Our recommendations for Frooto can be categorized in two ways. A lot of Frooto‟s problems comes from the mother company‟s image. So, we have some suggestions for the overall company and then some for Frooto.
PRAN‟s main focus should be on improving their product quality. Sub-standard products and haphazard cover-ups might be keeping them away from bankruptcy, but this is not substantial. The consumers are extremely conscious about the quality of products, especially food, so they would not compromise on that.
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Instead of doing such cover-ups, PRAN should come out clean about its mistakes, employ an external team to find the root of the problem and take strict disciplinary actions about it. And these should be heavily publicized.
PRAN should have an open invitation policy in its factories. So that the customers can see that their processes are safe and hygienic.
It is obvious that PRAN needs drastic changes in its workforce, specially the top level managers. It would be good in two ways. One, people would get the idea that the ones who put quality low in the priority list are not there anymore. Two, if someone who is well reputed in the industry gets involved with PRAN, his goodwill would benefit the company.
For Frooto, as it has already been mentioned, quality should be improved.
PRAN deals with Frooto as a functional product. Whereas, mango juice can totally be an innovative product now-a-days. PRAN can be the first company in Bangladesh to do so.t and still live a healthy life. That‟s why we‟re dedicated to make the food that people love even better
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