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Our company name is Zymo Cosmetics. As what the name describes cosmetic, our companys industry is a cosmetic industry. Cosmetic is a word that has been derived from a Greek word which means "technique to dress and ornament". In very early days Egyptian use a kind of balm which protects the skin. Romans use olive oil, rose water and bees wax to make a skin cream. In nineteenth century Vaseline had came and in 1911 the cream of nivea cream has arrived.
As the time passed and people have come from one century to other their eagerness to look good and young has grown up. In now a day's cosmetics industry is a very big industry and the largest cosmetic firm is L'Oreal. Cosmetic products are now available at everywhere and almost everybody is using it. United States is the biggest users of cosmetics.
Cosmetic industry is a very dynamic industry. This industry is based on some core components of business like marketing, supply chain, distribution requirement planning and so on. Because of the fast changing demand of the customers, this industry is very dynamic and it is very difficult to forecast or to understand the exact requirements of the customer. That is why in this industry the flow of information and the working of a supply chain are very important. Besides supply chain, Distribution Requirement Planning is also equally important. Our project will try to explain some of the features of this industry.
Till now there is no regulatory body for cosmetic industry, cosmetic industry is a self regulating industry which is not governs by any government or non government authority. In 1938 food, drug and cosmetic act had bought the cosmetic industry under the FDA's jurisdiction. But because of huge rise in the cosmetic industry the FDA has not been able to regulate the cosmetic companies. FDA does not approve any companies' product before it go the customer.
FPLA act has made it mandatory to show all the ingredient of the product, so that customer can know what they are purchasing.
Testing cosmetics on animal has been very controversial from years. Cosmetic product has some toxic material which creates skin and eye irritation. In 2003, animal testing of cosmetics product has been ban in Belgium, Netherlands and the UK. Still in lot of countries controversies companies are opposing this law.
COSMETIC PRODUCT SEGMENTATION
PRODUCT SEGMENTATION SHARE
Hair care 22%
Colour cosmetics 18%
Skin care 15%
Bath and shower 13%
Men's grooming 7%
Oral hygiene 7%
Sun care, Nail care & Baby care 5%
TOP 10 KEY MARKET PLAYERS
Procter & Gamble
Johnson & Johnson
CHAPTER 2 INTRODUCTION OF COMPANY
The company Zymo has been established in 2009. To establish long-term trust and relationship with clients and consumers by providing quality products and services in the fields of cosmetology, dermatology, oral care, hair care, baby care and herbal care at reasonable price with full integrity and thus by creating win-win situation. The Team Zymo consists of experienced and innovative Managing Executives, financially strong Investors, enthusiastic Office Staff, quality conscious and knowledgeable Laboratory Operators committed Production Supervisors, energetic and skilled Workers, cooperative Suppliers and our highly satisfied domestic as well as overseas Clients and Consumers. Company's management team consists of experienced and skilled personnel in the fields of cosmetics, cosmeceuticals, pharmacy, engineering and business management. The coordination between managing team, office employees and work-team create homelike atmosphere. The synergy of energy, enthusiasm, passion and innovation ensures a perfect combination of prompt action balanced with experience.
Zymo is a very new company in the market of cosmetic industry. At that point of time companies' major objective is to make the market of its product in India and expand it more in abroad.
Zymo has a vision of satisfying customer and winning their loyalty. Their main focus is on customer satisfaction because in cosmetic industry customer satisfaction is the main concern.
Satisfy the customer
Implement ERP systems (mainly considering supply chain and production planning)
Make a good market in India
Best quality products
Having their own logistics
Company has readily developed formulas of Face and Body cleansers- products for pure and soft skin - which are known for their effectiveness. Company's formulas include products for both oily and dry skin types.
The Products in this group are:
Pimple Care Face Wash
Exfoliating Face Wash (with Glycolic Acid & Salicylic Acid)
Cleansing Face Wash
Face Wash Gel
Face Wash Cream
Neem Face Wash
Fruit Face Wash
Bath Wash Gel
Face & Body Wash With Active Beads
Face Scrub (Apricot, Walnut, Cucumber, Strawberry)
Body Scrub (Apricot, Walnut, Cucumber, Strawberry)
The above products can have Herbal actives, Chemical actives or combination of both.
These products are available in different quantities such as 50gm, 100gm, 150gm, 250gm, 500gm, 1kg, and 5kg and in a 100kg container as a raw material for other company.
The above products in this group have a common formula for making and there are basically two types of ingredients which make these products that are BASIC and ACTIVE INGREDIENTS.
These ingredients are the basic or the base ingredients which are same in the above products.
These are the specific ingredients which are not same in the above products. All of the above products are having some different effect which makes them different from other products in the group. Active ingredients are those raw materials which make them different from others, and it is difficult to develop or to find these ingredients.
From all the above products, we have selected a specific product named Pimple Care Face Wash.
Ingredients: Aqua, SLES, CAPB, Carbomer, Active Globules of Vit. E & Tea Tree Oil, Aloe Vera, Perfume, Salicylic Acid, D-Panthenol, Triclosan, Allantoin
Basic ingredients: Active Globules of Vitamin E, Aloe Vera, D-Panthenol, Allontoin, SLES, CAPB, Carbomer, Perfume and Aqua.
Active ingredients: Tea tree oil, Salicylic acid and triclosan.
Quality Is the Prime Concern
Company's manufacturing plant consists of well designed hygienic machinery, effective infrastructure and eco friendly work environment with all the necessary machinery, required technicians and knowledge to produce and procure internationally acceptable quality and packaging requirements, leader in Private Label Manufacturer, Private Labelling.
All products manufactured at Zymo are approved at FDA of Gujarat, India.
Samples per production batch are rigorously and flawlessly tested at our hi-end laboratory setup on the day of production and then at regular intervals.
All company's raw material suppliers are market leaders in domestic as well as international markets.
The raw material inventory is inspected for quality at regular intervals without any miss.
Mr. Bharat Patel (Chemistry Graduate)
Product Development & Manufacturing Processes, Human Resource Management
Mr. Vikram Patel
Production Line Management
Mr. Ankit Patel (Pharmacy Graduate)
Research & Development, Product Development and Quality Control
Mr. Chaitanya Patel (Commerce Graduate)
Packing Material Purchase, Finance, Accounting, Legal Affairs
Mr. Tarak Patel (Business Administration Graduate, Elec. & Comm. Engineer)
Marketing, Sales & Promotion
LITERATURE REVIEW OF SCM
In a traditional point of view, a supply chain process would be a product is developed to be manufactured and then is delivered through the manufacturer-distributor-wholesaler-retailer chain. In the modern supply chain environment, service and product recovery have been integrated and have become two important components, i.e. the handling of products, components and materials during the recovery process (RevLog, 1998). According to one analyst, reverse logistics is driven by several forces, such as competition and marketing motives, direct economic motives and concerns with the environment.
The term 'supply chain' was coined in the mid 70's. Banbury (1975) used 'supply chain' as a term of passing on electricity towards the ultimate consumer. It was not until the 1980's, however, that the term 'supply chain management' came into context. Oliver and Webber (1982) discussed the potential benefits of integrating internal business functions of purchasing, manufacturing, sales and distribution into one cohesive framework. Stevens(1989) has defined supply chain management as the integration of business functions involving the flow of materials and information from inbound to outbound ends of the business. Dyadic or party relationships between suppliers are becoming part of the supply chain process (Harland, 1996). Here we see the formulation of a supply chain framework in terms of establishing contracts between firms. Organisations have been given the the opportunity to either vertically integrate or market their products in connection with other partners (Stevens, 1989).
In the 1970s, material requirements planning (MRP) was developed and managers realized the impact of huge WIP inventories on manufacturing cost, quality, product development, and delivery lead-time. The intense global competition of the 1980s forced world-class organizations to offer low-cost, high-quality, and reliable products with greater design flexibility. Manufacturers utilized Just-In-Time (JIT) and other management programs to improve manufacturing efficiency and cycle time. The evolution of SCM continued into the 1990s as organizations further extended best practices in managing corporate resources to include strategic suppliers and the logistics function. Many manufacturers and retailers are embracing the concept of SCM to improve efficiency and effectiveness across the supply chain.
LITERATURE REVIEW OF DRP
"A true planning tool that gives you the information you need to solve tomorrow's problems â€¦ today"
Distribution Requirement Planning (DRP) provides the basis for integrating supply chain inventory information and physical distribution activities with the manufacturing Planning and Control system. DRP is required in managing the flow of materials between firms, warehouses, distribution canters. It helps to manage these material flows, this thing MRP does in manufacturing. DRP links firms in the supply chain by providing planning records that carry demand information from receiving points to supply points and vice versa. DRP enables the firms to capture data including local demand conditions for modifying the forecast and to report current inventory positions. DRP provides the data for managing the distribution facility and the database for consistent communications with the customers and the rest of the company.
DRP AND MANUFACTURING PLANNING AND CONTROLLING:
Demand management is the connection between manufacturing and the marketplace. Plans derived from the DRP information and shipping requirements are the basis for managing the logistics system. DRP continually adjusts changes in the demand, sending inventories from central warehouse to distribution canters where they are needed. DRP is connected to the logistics system,
By helping determine vehicle capacity planning
By helping loading
By developing vehicle dispatching
By determining warehouse capacity
By providing the data accurately say when availability will be improved and delivery can be expected
DRP is usually used with MRP system. It can be regarded as the extension of manufacturing requirement planning in the logical view. DRP, starting from customers' requirements is used to solve distribution problems of material resources according to time, quantity and location in the field of circulation. The concept of DRP very closely mimics the logic of MRP. As with MRP, gross requirements consists of actual customer orders, forecasted demand or combination of both, scheduled receipts are the goods the distributor expects to receive from orders that already have been released while goods that already are received and entered into inventory constitute the on-hand inventory balance.
In most companies, DRP starts from inside, linking its production units to its field warehouse units. When the DRP records originate in a warehouse or distribution centre, they start at the independent-demand interface; that is, they are derived from forecasts. Because customers of the distribution centers make their own decision ordering decisions, demand is independent of the firm's decisions. From the independent-demand interface point on, decisions are under company's control. Timing and sizes of replenishment shipments, manufacturing batch sizes and purchase order policies are all under management control. The DRP approach allows us to pick up all the detailed local information for managing physical distribution and for coordinating with the factory. Because customer demand is independent, each warehouse needs detailed forecasts of end-item demand. However, careful attention to actual customer demand patterns may be useful in tailoring these forecasts to local conditions.
Sales and operations
Logistics system modules
Requirement Planning Boundary
A well developed DRP system helps management anticipate future requirements in the field, closely match material supply to demand, effectively deploy inventory to meet customer service requirements and rapidly adjust to the vagaries of the market place. In addition DRP system supports significant logistics savings through better planning of transportation capacity needs and dispatching of shipment.
The above diagram shows that DRP makes a linkage between customer and demand management through MPS. In the back end DRP shows the linkage to the vendors. DRP starts in the market place and helps in doing the demand management. The basic functionality of DRP is, it reduces the fluctuation between forecasted demand and actual demand. MPS in MPC framework will do the same thing of forecasting the demand but with the help of DRP company can understand the demand from the customer side. DRP maps the demand from downward means from customer till to the manufacturer. This type of knowledge for the company gives the opportunity of make-to-knowledge. DRP would be more efficient and work very well if the company is using Vendor Managed Inventory System. DRP enables the firm to capture data, including local demand conditions for modifying the forecast and to report current inventory position. DRP provides data for managing the distribution facility and the database for consistent communications with the customers and rest of the company. Demand management is the connection between manufacturing and market place.
Plans derived from the DRP information and shipping requirements are the basis for managing the logistics system. DRP continually adjusts changes in the demand, sending inventory from central warehouse to the distribution centers where they are needed. Basically DRP records the following things:
Forecast requirements (Gross Requirements)
In transit (Scheduled Receipts)
Projected available balance (Available)
Planned shipments (planned order releases)
Records several warehouse inventory
THEORITICAL ASPECT OF STUDY
SUPPLY CHAIN AND DISTRIBUTION REQUIRMENT PLANNING
This study has been done to understand the concept of supply chain and distribution requirement planning in an organisation. Supply chain plays an important role in an organisation; some of the management guru has said that it is the back bone of a company. Supply chain is a very major topic to cover in that report that is why this report will focus on only that part of supply chain that has been use in zymo Pvt. Ltd.
There are following terms that are very important are regularly used in supply chains which are as follows:
This means managing the inventory that has been arrive from the vendor.
The process of converting raw material into finish product is known as operations.
This process includes the distribution of finished products to the wholesalers, distributors and customers.
Distribution Requirement Planning (DRP) is a system which helps the company to reduce its fluctuation of forecasted demand and actual demand. It also helps organisation to make its inventory level on proper level, so that they do not lose any customer and do not put lot in inventory carrying cost. DRP works as a middle ware between customer and manufacturer. This report will show how the managers of Zymo will do DRP in there company.
PRIMARY FOCUS OF STUDY:
To study SCM
And Distribution Required Planning (DRP) of Zymo Pvt. Ltd.
SECONDARY FOCUS OF STUDY:
Is to understand the following which affects the companies SCM and DRP
Research and development phase
Food and Drug Administration (FDA) approval and certification
LIMITATION OF THE PROJECT:
At that point of time the main customer of Zymo are in foreign countries. The major wholesalers and distributors of the company are also in foreign countries. So, it is very difficult for us to collect the data.
Company did not provide the statistical data.
We are not doing the internship project.
Haven't got the permission for more than five visits of the company.
Not possible to conduct meetings with managers of the different managers.
DETERMINING SOURCES OF DATA
After adopting a particular type of research design, the next step is to identify the sources of data from where to get the required information. There are two types of sources of data.
Here, the data required are collected for the first time by the researcher in order to study about a particular topic.
In this study, we have used Primary Data Collection method. We have undertaken the Personal survey of the employees by Interview Method on our topic of research and then getting that Interview done on employees of Zymo Pvt. Ltd.
We also have done the personal meetings with the managers regarding our project topic and they provide us related data.
Any data which have been gathered earlier for some other purpose are called secondary data in the hands of the marketing researcher. Such data are not collected for the first time.
PRIMARY FOCUS OF STUDY:
SUPPLY CHAIN OF ZYMO:
Before explaining the supply chain of a company, we must have to explain what exactly supply chain is. Supply chain is a flow of three things which are as follows:
On these three things supply chain depends.
Business work flow of Zymo Cosmetics
The above diagram is trying to explain the rough view of business workflow, so that the report will explain the different aspects of the business flow. In the company, order will be received by B to B portal. After receiving the order the R&D department will formulate a particular formula for that order. After that the company will take the Food & Drugs Administration (FDA) permission. Once the certificate of permission for that formula has been granted, the sample for that product developed and sent for the testing purpose. When the testing is approved the production will start. After completion of the production the finished product will be sent for packing. After that random checking of the product lot will be done to find out the quality of the product lot. At last, product will be sent to the 3rd party logistics companies for the final delivery of the product.
Supply Chain Management solutions can deliver great values to company's existing systems. Implementation of these solutions will help achieving incredibly high return on investment and will have tremendous impact on company's business, which include: better productivity, faster order processing, greater visibility, the elimination of maverick or unplanned purchasing, etc.
Marketplace is the venue where the enterprises can post their products for sale. A sophisticated shopping cart will be integrated into the electronic marketplace in order to automate the buying process.
Electronic auction system can use both English and Dutch auction methods. For convenience the auction component can be integrated into the electronic marketplace. Online auction helps liquidate surplus goods easily.
Reverse Auction solution allows the company to automate electronic procurement, where suppliers compete for business real time online.
Each associate of the B2B portal will get a Storefront that may reflect profile of the company, its products, services or other information.
Forum or a Discussion Board is an organized, on-line interactive message board where participants conduct discussion on a set of topics by posting questions, comments and responses.
Internal Messaging System Elaborate Messaging System allows a participant of the B2B portal send and receives messages from other participants and the company. Since the messages do not leave a secured server, participants would not be worried about sending sensitive information over the Internet.
Classified Catalogue based bulletin board allows company associates to post important notices in various predefined formats.
Directory of Companies is a listing of all registered associates of the B2B portal either by business category or by alphabetical order. An advanced search engine tool is incorporated in order to find a company based on data provided.
E-catalogue is a hierarchy of product and service categories based on UNSPCS, a global products and services classification method that covers the broadest collection of industries and commodities available today, and designed to facilitate e-commerce transactions by providing geography-independent common nomenclature system.
Product Content Adding System Product adding mechanism based on either easy-to-use wizard or simple but detail forms allows users to integrate products or services with accurate and up-to-date information.
Product Notification The system can generate an alert and send by email to a user, who requested to inform once a particular product or service gets added to the E-catalogue.
Numerous other features could be incorporated to an existing B2B portal depending on requirement, such as: News Aggregation using RSS feed, Contact Management, Electronic Journal, Press Room, Document Repository, etc.
A B2B portal helps global buyers connect with global suppliers and vice versa. An example of B2B can be a plastic-bag manufacturing company supplying plastic bags to a textile mill for packing their finished goods.
List of B2B portals that company is using to get the order are as following:
Topic 2: Research and Development phase (R&D)
This is the main phase of the development of the product. In this phase after receiving the order from the customer, the role of R&D will start. The R&D will develop the different formulas which can fulfil the requirement of the customer eg. In face wash there are different types i.e. pimple care, neem, whiting, moisturising, oil reducing etc. After the development of the formula the formula sends to the FDA of Gujarat for the approval. After getting the certification approval from the FDA Zymo orders the raw material from the different vendors to make the finished products.
After receiving the certificate of the approval the production house of Zymo will make some samples for the checking of products and give them to the customer who ordered that product and if the customer is satisfied by the product the production process will starts.
Topic 4: Vendor
After receiving the order the company starts its processing of collecting the raw materials from the different vendors. The selection of vendor is the main problem for the company.
Zymo select the vendor for its BASIC raw material which are used in every products of that group from B2B portals, from doing this the Zymo have lot of options available in which he will choose the best option available as per his cost and quality.
For ACTIVE raw materials the company has some special 8-9 vendors who provide them these raw materials. This is because the whole product differentiate from other products is based on that active raw material and Zymo never wants to compromise with the quality of that active raw materials.
There are few vendor names for these active raw materials which are as follows:
1. Devrajpvt. ltd. (for Demineralised Water)
2. Galaxy Surfactants pvt.ltd.(For chemical products)
3. Turin Specialist pvt.ltd.(For perfume and natural colours)
Packaging raw material for our product "pimple care face wash'' such as printed plastic tubes, plastic caps, paper and plastics for making the product box, Zymo will give a contract to the other company. For giving that contract zymo again take the help of B2B portals and places their order.
Topic 5: Vendor Rating
Zymo uses B2B portal for selecting its vendor. But on portal there are lot of companies available and the best one among them as per the company past experience Zymo rate them on basis of 5 points. 5 are the maximum or the best and 0 is the minimum or worst supplier. These points are given on the following basis:
Delivery schedule adherence
Topic 6: Lead Time
It is a time period which the supplier takes to deliver the raw material to the Zymo. The lead time is around 25 to 30 days. Company which make the ACTIVE ingredients and the company which makes the specific packaging materials for private labelling will took the maximum time period, because these raw materials are very specific and hard to produce.
Topic 7: Transportation
From vendors place to production house the raw material is transported through different transportation mode. The mode is selected as per the safety requirement of the product. There are following types of transportation mode available:
Currently Zymo is using only private carrier mode that are trucks and rail, because all the raw materials are taken from the Indian vendors only.
Topic 8: Delivery Risk
The whole risk of transporting raw material from vendor's position to production house is on vendor. If any thing will happen with the product the vendor is responsible for that damage. Vendor will consider this risk when he sets the price for the Zymo at the time of giving quotation to the Zymo.
Topic 9: Inbound logistics
Inbound logistics is the management of raw material after receiving it from the vendor. Inbound logistics includes checking of stocks, management of stocks, labelling and bar coding of stock, free flow of stock from warehouse to the production department.
Zymo is a cosmetic company and there is a particular rule in our Indian Law for the inventory warehouse in cosmetics industry i.e. the company must have to put their inventory within the company premises. If company wants to put their inventory in a different place which is not in the production premises, the company has to take the permission from the excise department of India. Zymo is currently storing his inventory within the production premises; he does not have his separate warehouse.
Management of Inventory
When the raw material reaches to the company premises by truck there are four persons who are particularly assigned for managing the inventory. First, after unloading the raw material to the right side of the company, the assigned persons match the dispatching list with the cargos available. After that they randomly select any cargo and the check the quality of the material and if they find the quality of material is as per the requirement of company then they start doing bar-coding to keep the tracking of raw material.
When the production department give their production requirement to these for persons, they arrange those raw materials from the inventory and provide it to the production department. The production department will communicate the message of inventory requirement to the inventory management persons by four modes of communication i.e. call, e-mail, fax, face-to-face.
Topic 10: Cash flow
There are two criteria of cash flow. They are,
Payment to vendor:When the company places the order for the raw materials, he has to pay 50% of the total amount initially and then after receiving the raw material company has to pay the remaining amount. Initially new vendor does not provide any credit period to the company but once the good relations between the vendor and the company has been developed, vendor provides the credit limit to the company.
Collection from customers: When customer places the order first time ever, he must have to pay 50% of the total amount for R&D purpose but if the customer is a regular customer then he has to pay only 20% of the total amount as a security. After receiving the finished goods, customer has to pay remaining amount.
Topic 11: Outbound logistics
Outbound logistics means the management of finished products which includes inventory management, transportation and so on.
3rd Party Logistics (3 PL):
Zymo is using third party logistics and Clearing and Handling Agents (CHA) for the paper work and the transportation of the goods. Zymo is exporting their product, that's why they have to do a lot of paper work so they have gone forCHA to reduce the lead time. When finished products are ready to be loaded in the truck, excise officer checks the products whether they are as per the order or not and after that he puts the seal on the products and that sealed will be opened only when it is reached to the destination but if the custom officer feels any suspicious thing in the container during transition, he has the authority to break that seal and check the product.