SL. No.:
To Be Assigned by ISCEA
2017 ISCEA Ptak Prize
Team:
BUET-0104-17
Team Member -1
Team Team Member Member - 2
Name : Naimur Rahman Chowdhury
Name : Farzana Islam Tamanna
Signature :
Signature :
Team Team Member Member - 3
Team Team Member Member - 4
Name : Shoyeb Raihan Dipto
Name : Sampa Halder
Signature :
Signature :
INTRODUCTION AND OVERVIEW: Bangladesh’s economy is the second fastest growing major economy of 2016 (Dec), with 7.11 percent GDP growth rate where the growth rate was 6.12 percent in 2015. Export earnings are having major contributions in this high GDP growth rate which are dominated by the RMG sector. But things have become a bit different in the past few years. Are not we becoming too much dependent on only one export sector? It has been found out that export contribution to GDP is actually declining over the last four years.
BREAKING DOWN THE MAJOR ISSUES: Bangladesh’s export earnings are driven by Garments sector which contributes more than 10% all by itself to GDP. This is actually a very big percentage. This sector produces mostly basic and low rate products. We are giving way too much attention to only one sector where the other resources are going unnoticed. Besides, as the time is going by, the Garments sector is facing more and more drawbacks. These are mainly caused by: •
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RMG industry is facing increasing competition from Vietnam, India and Pakistan. Recently the value of garments exported out of India has just surpassed our garments export. Because of incidents like Tazreen fire, Rana Plaza collapse, political unrest foreign investors are less and less interested in investing in our country. Many investors have already stopped doing business here. Also the Trans-Pacific Partnership Agreement (TPP) and the withdrawal of generalized system of preference (GSP) by America in 2013 have caused significant problems. Besides, after Brexit Bangladesh garments will not automatically enjoy duty and quota free access in the UK market as was the case when the country was a member of EU. Moreover, the continuous riot of the workers, transportation issues, corruption etc. are continuously creating adverse effects in Garments sector.
Clearly, it is time that changes should be made. The government has to concentrate on export diversification now if we want to see Bangladesh enlisted as the new Asian Tiger. Obviously export diversification is the main goal. But only by diversifying the export will not help. At the same time the overall business infrastructure must be improved unless diversification alone cannot change things much. Now improving the infrastructure is certainly going to be challenging. After choosing the new export products to create diversification there are some factors which must be gone through properly. These act as catalysts and once ensured will guarantee success. These sidekicks are: • • • • • • • •
Improving the transport Ensuring political stability Ensuring the rights of the workers Decreasing the Lead Time Reducing corruption Improving government-investor relation Presence of skilled employees Improving customs procedure
With a view to reaching the growth rate of 8% by 2020, it is much needed now to establish a ‘ministry of supply chain management’ as soon as possible. This ministry will supervise the entire export system of the country through SCM. The ministry will be responsible in swiping away all the factors causing impediments, it will drive out the bottlenecks in export sector. Investigating the current business situation across the globe, this ministry will provide information to the investors and entrepreneurs. Finally, it will encourage, furnish support and smoothen the way so that the investors can run their business conveniently.
What the possible diversifications could be: Analysing the market conditions, some potential export goods have been identified which could successfully capture the market. These are the Highest Priority Products: • • • • • • •
Agro-products and agro-processed products. Light engineering products (Including auto-parts and bicycles). Leather and footwear products. Pharmaceutical products. Software and ICT products. Home textile. Toiletries products.
Now, to watch Bangladesh emerge as ‘The New Asian Tiger’, there has to be something that would investigate to promote these exports and speed up the whole process, therefore, a formation of a new ministry is needed which will carry out the required functions and processes in its own way.
GENERATING THE POTENTIAL SOLUTION: FORMATION OF ‘MINISTRY OF SUPPLY CHAIN’ For maintaining the brand promise of becoming ‘The New Asian Tiger’, the Ministries under Bangladesh Government have already been working on the rapid progress in the economic sectors involving all the flagship exports and their aspects of gaining momentum in the process. However, Th reason of still having the negative balance in the total trade in Bangladesh is not bringing all the departments in a common platform. For that the generation of “Ministry of Supply Chain” has become a mandatory, which will incorporate with all the related ministries in formulation and administration of the rules, regulations and laws relating to all the trades in order to optimize the whole supply chain process in the country as well as in overseas. THE COLLABORATIVE APPROACH OF SUPPLY CHAIN MINISTRY
In this collaborative process ‘Ministry of Supply Chain’ will conduct following actions: 1. Developing new strategies, policies and plans to e nhance the Cross border and internal supply chain in Bangladesh. 2. Focusing on renovating and developing new infrastructures to accelerate the supply chain capabilities in Bangladesh with the help of related Ministries. 3. Generating measures to bring innovations in all the supply ch ain drivers (mostly focusing on inventory, transportation and information flow) 4. Accelerating and promoting exportation of goods with high opportunities to reach the apex in the trade market and thus rebranding Bangladesh with rapid supply chain o f various exports. 5. Introducing IT in all the factors of supply chain to create a new paradigm in the trade procedures of Bangladesh.
6. Making diverse and more resilient portfolios of the exports as well as splintering their supply chain.
MINISTRY OF SUPPLY CHAIN: MEASURES TO BE TAKEN, FUNCTIONS TO BE SERVED AND THE BENEFITS
1.Establishing an integrated ‘Web Supply Chain’ for the beneficiaries (The Rapid Flow of information): To accelerate the flow of information regarding “ Warehouse Management Systems, Transportation Management Systems, Enterprise Resource Planning (ERP)” platforms and a myriad of other puzzle pieces of data, the Ministry has to establish an improved information flow system throughout the country. The task of the ministry is: a. Connecting all the beneficiaries in a common line with the centralised highspeed broadband system. b. Creating the integrated web supply chain for the manufacturers, suppliers and distributors to help in1. Share information about consumer demand. 2. Rapid notifications about adjustment and changes. 3. Increase speed of processing transactions. 4. Reduce cost of handling transactions.
2. The Ministerial Procurement Benefits: In order to accelerate the ‘Process integration’ for the suppliers, manufacturers, distributors and retailers, with the help of other ministries supply chain ministry will establish policies. Major decisions include:
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Customer Procedures Simplifications: Eases customer difficulties in exporting goods from the countries. Introducing online export licencing for the retailers, integration of promoting portfolios for different manufacturers, online join venturing for licenced manufacturers. Online Property Registration system: with the help of ‘Ministry of Industry’ an online platform for the licenced merchandisers will be introduced to register valid properties and minimise the time.
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Removing red tape: in order to expedite to start a business and minimise the required time.
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Issuing construction permits through internet: To minimize the total procedure for licenced organisations.
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Contract Enhancement: Policies to enhance contract under a sponsored agenda. Faster permission to install small warehouses: totally bringing under online process to fasten the procedures.
3.Establishing The ‘Supply Chain Research and Geopolitical Support Centre’: Ministry’s specialised branch to research on the optimisation of transportation, minimisation in the lead time and inventory management. Under the department any organisation high end to low end will get supports on their: Location and Transportation decisions. Production decisions Inventory control Distribution strategies Supply chain integration Access to the research centre for all the parties will be equal and free. • • • • •
The Geopolitical support centre will help the suppliers and retailers to associate with regional powers to integrate the trade.
4. The new dimension of logistics framework by supply chain ministry: In association with ministry of road, transportation and highways, the supply chain ministry is going to segment the logistics system throughout the country to reduce the lead time of products supply and also optimise the whole process. This starts with emphasising on the transport system of core three zones of export goods:
To reduce the shipping time among these areas innovations should be brought with: •
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System Digital Traffic Signal: By putting sensors in road which can dete ct the density of transports in roads and works accordingly to that. Changes in Railway system: Since 32% of overall area in Bangladesh is covered with railway Ministry would plan to facilitate the system by – 1. Increasing locomotives, wagons there is enough chance to increase revenue. 2. Establishing double line in most of the long distant communication from Dhaka. Promoting Air shipment: there are 13 operational airports and Short Take-off and Landing (STOL) ports in Bangladesh, so, Air cargo and STOL services should be handed over to the private sector by the ministry and improve them by o
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Designing an effective share data platform that allows for the seamless sharing of data globally. By meeting customer demands for swifter deliveries is to leverage existing e freight technology. Upgrading GPS solution to track the location of sh ipments.
5. Rebranding Bangladesh through ‘Branded Supply Chain’: Rise of ‘The New Asian Tiger’, the brand promise of Bangladesh’s rapid economic growth is mostly depending on the ‘Dynamic Supply Chain’ process of the exports. The ministry besides generating potential solution to enhance the capability of the process, they need to brand the ‘Rapid supply chain’ in the world market to attract investors of overseas. This process includes: •
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Establishing the ‘Branded Supply Chain’ division to collectively brand the rapid supply chain process of Bangladesh. Branding export products that have high opportunities to reach the peak in near future with the motto ‘Low Tariffs, Fast Supply Chain’.
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Supporting different world forum conferences to give an o verview of the multidimensional supply chain of Bangladesh.
6. A new framework for managing inventory: The ministry of SCM will have an inventory management department which is one of the most essential assets of business operation. It has a complicated feature since our model includes cross border supply chain dealing with different countries and multiple warehouses. The main motto of this department is to m inimize the inventory cost. This inventory cost if optimized can really cause a significant increase in total gain. To do so, this department of inventory management under the ministry of SCM has undertaken these following measures: 1. Inventory Forecasting: 2. Scheduling supply: 3. Re-evaluate lead times: 4. Introduction of the cloud system (Cloud based ERP platform establishment policies) To summarize the role of inventory management department in supply chain ministry, a flow chart is given below showing the framework: Analyzing the existing supply chain
Classify suppliers and products
Evaluate inventory cost of existing chain
Modify existing chain
Evaluate the new inventory cost
New cost
YES
Integrate customer values to the chain
Strive for continuous improvement
NO
FORECASTING GDP ( THE IMPACT OF SUPPLY CHAIN MINISTRY) (Amount in Crore Taka)
Updated forecast(2017/18)
Budget estimate(2017/18)
Plan(2018/19)
Plan(2019/20)
Import Duty
14669
15027
15413
15859
Export Duty
31
33
37
41
Total revenue
14700
15060
15450
15900
Collaboration Logistic planning IT expenses HRM & CRM expenses Branding Surplus before forecast allowance Forecast allowance Surplus
(13980)
(14340)
(14725)
(15190)
720
720
725
710
(250) 470
(350) 370
(350) 375
(350) 360
2.42%
2.45%
2.59%
2.91%
2.49%
2.58%
2.68%
3.12%
Revenue
Expense
Economic forecast
Real GDP Growth Nominal GDP growth
This can give a clear visualization that The SCM ministry would definitely boost not onl y the dynamic progress in supply forecast but also the GDP contributed from the export and trade processes.
Financial Assistances the ministry is going to provide for these Highest Priority sectors: Since the ministry believes that these Highest Priority products will be the successful alternatives to the Garments sector, so it will provide some benefits and facilities to these sectors to encourage the investors and entrepreneurs. These are: • • • • •
Business loans at reduced interest rates. Income Tax exemptions. Call centre to answer any query, provide suggestions. Possible financial benefits or subsidies consistent with WTO agreement. Export loans with soft terms and at reduced interest rates.
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Air transport facilities at concessionary rates. Duty draw-back facilities. Assistance in production and marketing. Assistance in searching foreign market. Necessary initiatives to attract foreign as well as local investments.
The Big Ideas the Ministry Will Implement: Along with the other tasks, the ministry of SCM will develop and implement these ideas to expedite the entire process even more. These ideas and plans are comparatively newer and also unique. •
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There will be call center for customer services where the keen investors, individuals can obtain valuable information. The call center will be equipped with employees having sufficient knowledge so that they can satisfy the customer’s queries. Training programs will be organized, seminars will be arranged monthly or at least once in every two months. It is highly believed that these will be able to bring out more and more investors and create interest in the minds of individuals as well as boost them up with courage and confidence so that they can emerge as future investors, entrepreneurs. Double Taxation Avoidance Agreement (DTAA) can be implemented with other nations. This will serve two purposes, (i) Reduce the cost while exporting goods and (ii) Draw in foreign investments. There will be a website which will contain essential and updated information and the investors will have free access to it. They can obtain information such as current demand of other nations, current market price of products. Knowing these they will know what quantity of products to be produced and adjust cost of production. Besides, the investors will get the government services online. This will prevent unwa nted time loss. The ministry will be working to reduce the regulatory burden on entrepreneurs. These include granting permits more quickly or even automatically and making greater use of digital technology.
Finally, we can conclude that the working principles of the ministry of supply chain management may be somewhat sophisticated but once established it can bring radical change in our economic growth. Proper implementation of the process prescribed by this ministry will eventually make our dream come true; there is no doubt in that. And then Bangladesh can proudly come forward as ‘The New Asian Tiger’ making a grand entrance to the modern world.
