EXECUTIVE SUMMERY

This report is accomplishment of the internship program as required for the completion of the
MBA program at Institute of Business Administration (IBA) under University of Rajshahi.
The internship too place in BOC Bangladesh Limited. The report is divided 7(seven)
chapters. In between this seven chapter’s major portion of the report utilized to analyzing the
management process of mitigating supply chain risks.

The interest for Supply Chain risks and means for handling those has been receiving immense
attention in the recent years. As companies are moving towards longer supply chains (e.g.
due to recent practice of outsourcing) and facing increasingly uncertain demand as well as
supply, the issue of supply chain risk handling and risk sharing along the supply chain is an
important topic. The scenario is no different in BOC Bangladesh Ltd.

Although ‘Supply Chain Management’ is comparatively a new field in the modern

management science, it is evident that this is the area where companies can make huge value
addition if proper attention is paid. Overall objective of this study is to gain valuable firsthand
insights into supply chain risk management through compilation of the contemporary theories
& suggested toolkits in this field and presenting the applications & practices of similar
fashion currently taking place in BOC Bangladesh Ltd.

Presently in BOC Bangladesh - Operations Department, Supply Management Department

and Customer Engineering & Distribution Department performs the total supply chain
activities as a network in collaboration with each other. Each department assesses their own
risk elements and manages these elements through their individual departmental initiatives.
So, this exploratory study could be groundwork for fighting the ‘total supply chain risks’ in a
more coordinated fashion as a single-team initiative.

Supply chain disruptions can arise from external sources e.g. natural disaster. Internal sources
is also important e.g. failure to integrate all functions in a supply chain. In BOCB the
required ‘Inventory Level’ level is determined through the input from all the relevant
functional areas i.e. Supply Management, Factories and the Planning department. If the

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coordination among these three teams lacks information or any other aspect, malfunction
might be obvious.
Disruptions can also result from attempts to create a more efficient, cost-conscious supply
chain environment. Many a times, implementation of ‘low-stock scenario’ can cause serious
hazards. BOC Group’s suggested benchmark for raw material inventory holding might not be
suitable for BOC Bangladesh Ltd. as “estimated Lead-time” never matches with the “actual
Lead-time” due to uncertainties in Chittagong seaport and Benapole land-port
Assessable major risks in the supply chain are (i) Schedule Risks, (ii) Cost Risks, (iii) Quality
Risks and (iv) Commercial Risks. The sources of these four types of risks are incomplete or
incorrect specifications, when the supplier’s inputs are late, official bureaucracy, poor
communication, production problems, supplier’s cost increases, adverse movement in
exchange rate & inflation, increase in customs duty, inadequate / incorrectly undertaken
testing and inspection, change of supplier ownership or change in the key personnel and force
majeure etc.
BOC Bangladesh uses the enterprise wide business software- SAP which has got the
‘Material Master’ database. So, BOCB can maintain correct and complete Specifications for
all its raw materials. Besides maintaining correct and complete specifications through SAP
and communicating the same through ‘Purchase Orders’, BOC asks for Pre-shipment Testing
and Inspection wherever necessary.

Arrangement of Adequate training is arranged for ‘Commercial Awareness’ to the relevant

Personnel. The training, workshops and seminars (usually arranged by the MCCI, DCCI, and
Commercial Banks etc.) are regularly attended by BOC people to mitigate commercial risks
in the supply chain.

Macroeconomic vacillations - whether due to terrorism, war worries, currency fluctuations or

other cyclical downturns - have far reaching consequences for levels of demand, pricing, and
purchasing policies. The sources of risks emanating at this level are likely to be beyond the
direct control of supply chain managers, nevertheless the susceptibility of the networks can
often be assessed in advance, thus enabling informed decisions to be made regarding the
merits of risk avoidance or mitigation strategies.

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The demands of the marketplace, constant changes in product specifications, together with
other continuous improvement initiatives within the organizations and the wider industry as a
whole leads to the fact that the supply chains never actually reached a truly ‘stable & steady
state’. Cost reduction will remain as the constant theme, emerging as the principle driver
behind the universal moves towards longer, leaner, more consolidated, but potentially less
stable supply chain network.

CHAPTER – 1 (ONE)

MANAGEMENT PROCESS OF MITIGATING SUPPLY CHAIN RISKS: A STUDY

ON BOC BANGLADESH LIMITED

Management process of mitigating supply chain risks: A Study on BOC Bangladesh Limited.

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This report is prepared after a close work and taking essence of corporate world during my
internship period in BOC Bangladesh Limited. Surely it was a nice experience to be stay and
work in BOCB as an internee. As an integral part of MBA degree this internship placement
placed by IBA, Rajshahi University to complete the degree and also the required 3 credit
hours which is equivalent to 1 course.

1.1 Introduction
Today’s marketplace is characterized by turbulence and uncertainty. Market turbulence has
tended to increase for a number of reasons. Demand in almost every organizational sector is
more volatile than was the case in the past. Product and technology life-cycle have shortened
significantly and competitive product introduction make life-cycles demand difficult to
predict.
At the same time vulnerability of supply chains to disturbance or disruption has increased. It
is not only the effect of external events such as wars, strikes and terrorist attacks, but also the
impact of the change in the business strategy. Many companies have experienced a change in
their supply chain risk profiles as a result of changes in their business models.

1.2 Background of the Study

Supply chain risk management is receiving increased attention in recent years. With events
such as 9/11, the foot and mouth outbreak in Europe and hurricane “Katrina” all impacting
on organizations and global supply chains they are part of. Trends including the rapid growth
in global sourcing and offshore manufacturing; the continued move to reduce the supplier
base; industry consolidation and the centralization of distribution all change the risk profile of
supply chain and businesses. Supply chain risk management is now a priority on many
CEO’s agendas.

The commercial/ procurement department at head office, its central buying role, is
responsible for carrying out all purchase decisions involving imported goods as well as for
local purchases common to regions, Branch and Head Office, and any other item/s specially
requested by a divisional and departmental head or the authorized representative.
‘Supply Chain Management’ is comparatively a new field in the modern management
science, it is evident that this is the area where companies can make huge value addition if
proper attention is paid. And to ensure the proper value addition, elements of ‘risk
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management’ come simultaneously. So, it is also a good time for BOC Bangladesh Ltd. to
explore and examine the risk elements present in its supply chain.

1.3 Overall Objective

The primary objective of this project is to complete the course requirement of the MBA
program.

Overall objective of this study is to gain valuable firsthand insights into the supply chain
management process and risk management of BOC Bangladesh Ltd through compilation of
the contemporary theories & suggested toolkits in this field and presenting the applications &
practices of similar fashion currently taking place in BOC Bangladesh Ltd.

1.4 Specific Objective

 Acquiring insight into the current theoretical developments in the field of supply chain
risk management.
 Assessing the current ‘supply chain risk’ and ‘risk management’ situations in BOCB
along with the management perspective.
 Presenting few risk management toolkits available in the supply chain theories.
 Designing process of supply chain for better handling of the risk and suggesting some
specific action for BOC Bangladesh.

1.5 Scope of the study

The study limits itself in supply chain management in context of BOC Bangladesh Ltd in
light of theory. As the prime area of supply chain, it emphasizes more on the procurement,
specially the import procurement. It also tries to encompass related issues distribution &
logistics.

However, it does not analyze the financial and subjective impacts of such issues on the
current business of BOC Bangladesh Ltd. Moreover, the downstream of the supply chain
management – the customer side, is completely excluded. The Export-import fraud and risks
in E-businesses are also not included in the scope of the study.

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1.6 Methodology

1.6.1 Type of Research:

This is an exploratory research. This study is based upon only qualitative methods. The
reasons behind doing this exploratory research are:

♦ Supply Chain Risk Management is not formally implemented in BOC Bangladesh

Ltd.
♦ It is comparatively new area of study in the context of Bangladesh. Moreover, no
prior study about Supply Chain risk management in Bangladesh is found.

This report primarily wants to encompass the basic study areas in light of the contemporary
theories and management practices in the developed countries.
Data analysis method: Summary

1.6.2 Sources of Information:

Information was collected from two sources.

Secondary sources of data

Since the report is done on such an area where there was not much previous work done and
the research is aimed towards exploring the contemporary theories & good practices of the
corporate bodies in developed countries, secondary data was the main information source.
Texts on the supply chain management and Internet was the primary source of secondary data
on the subject. Furthermore, some other e-magazines on supply management, BOC in house
journals were consulted to extract necessary information.

Primary sources of data

Two sources were used to collect the primary data:
(a) Unstructured Interview
(b) Participant Observation
Rationale for using the above methods:

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  No data collection instrument like questionnaire or checklist was used as
structured interview could limit the areas talked about the risk scenario. As an
exploratory research, the aim was to capture as much breadth as possible.
 As I am working for two months with the supply chain management team, I
could put my on-the-intern experiences in the report.
Unstructured interviews were conducted with managers from various levels from the
departments related to supply chain network namely Supply Management (purchasing)
department, Customer Engineering and Distributions department, Operations (Production)
department.

Each interviewee was asked to reveal what they considered to be the vulnerabilities within
their area of operations, the sources of risk and the tools or techniques currently used to
mitigate those risks. They were also probed for suggestions as to how implementation of
existing approaches might be improved along the whole supply chain.

1.7 Limitation of the study

Some important facts, which deserve to be mentioned in this regard, are:

 As issues like risk and vulnerability are sensitive issues to be talked about, so interviewed
managers were not much prone to provide quantitative data & objective information.
 Some information was not provided on the ground of its being confidential, as BOC
Bangladesh Ltd. is a public limited company enlisted in the Stock Exchanges in
Bangladesh.

CHAPTER – 2 (TWO)

GROUP PROFILE

2.1 Abstract

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BOC Group has been recognized as one of the leading multinational companies around the
world. Its main business is providing people life saving gases along with other gases. BOC
Bangladesh Ltd (BOCB) is one of the leading multinational company, owned by the German
company “The Linde Group”.

BOCB has been the pioneer in welding business and it has been recognized by most of the
companies of Bangladesh.
No business is without any loopholes. So, the main purpose of the report is to identify those
loopholes and coming up with probable solution that might be considered as vital points by
the management of BOCB.

The main rational behind doing such report is to fulfill two primary objectives. One is to
fulfill my Internship, which is the part of my academic curriculum. Another is to find the
current state of market condition of welding products and management process of mitigating
supply chain risks. So, for the convenient of doing research, I have divided the report into
two parts. The first part will cover the organizational part. In this part, the organization will
be analyzed basically from secondary data source-magazine, journal, official document of
BOCB, etc. And the second part will be analyzed from primary data source. After analyzing
these parts, I would come up with possible findings and recommendation as per analysis.

2.2 Organization Review

BOC Bangladesh Limited was formed in 1935 by the British Oxygen Company (BOC) under
the registered name "Indian Oxygen and Acetylene Company". After partition the name was
changed to Pakistan Oxygen Limited and after liberation the name became Bangladesh
Oxygen Limited. In March 1995 the company changed its name to BOC Bangladesh limited,
as a part of global think process. Every member of the BOC group is known as BOC with a
suffix of the country name where it is located.

BOC incorporated in Bangladesh in 1973 under the company act 1913. it listed entity in
1976. it is a direct subsidiary of BOC group PLC UK. The entire shares of BOC PLC have
been taken over by Linde AG, a German company during 2006 through an acquisition
process.

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In 1880 when Arthur and Leon Brine, two British brothers took out the first of their plants on
a process for separating oxygen from air, they clearly believed that they are moving into a
vital expedition. But even they could not have imagined they were embarking on a voyage
through more than 100 years of modern industrial history-a voyage in which the company of
their creation pioneered developments that helped to shape the world, as is it today.

The discovery Of O2 in the air by the great English scientist, "Lavosie Priestly" was the
beginning of the "British Oxygen Company". Initially it was in the United Kingdom and
thereafter spreading in many different countries of the world.

2.3 The Linde Group

The Linde group is a rich collection of business and brands, each with its own history and
proud legacy. Its strength comes from close to 50,000 people, spread across more than 70
countries, each with a unique ability to contribute and add value. It has different cultures,
traditions, languages, beliefs and styles. What binds it together is its humanity, a shared
vision for its company, and a shared set of core values and foundational principles.

The core values and foundational principles provide a framework that helps to guide our
decisions and actions. They influence the way we behave and interact with one another. They
guide the way we deal with the customers. They set the standards for engaging with other
stakeholders. They affect the way we are viewed, as individuals and groups, both inside and
outside the organization.

We will judge ourselves as successful when insiders and outsiders meet Linde people and are
impressed by our rich diversity, but also detect our common Linde spirit, pervasive across all
levels, functions and locations.

2.4 The Linde Spirit:

The Linde spirit refers that, we are united by our new vision, core values and foundational
principles.

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The Linde Values:
• Passion to Excel
• Innovative for customers
• Empowering people
• Thriving through diversity.

The four foundational principles:

• Safety – We don’t want to harm people
• Integrity – Our actions are honest, fair and ethical
• Sustainability – We are preoccupied with today’s success, but accept our
responsibility for future generations.
• Respect – Every human being deserves to be treated with respect.

2.5 BOC Group

BOC Group is one of the leading British based groups operating in some 60 countries of the
globe with turnover in excess of six billion dollars and strives to serve almost two millions
customers around the world with most essential product including life saving gases.
Whatever the industry or interest, BOC's goal is to respond to their customer's needs as
quickly and effectively as possible. Their ever-changing requirements are the driving force
behind the development of all BOC's products, technologies and support services.
BOC recognize that employees are their most important asset, and through them BOC ensure
that they play active role in communities around the world and are committed to the highest
standards of safety and environmental practice. At the same time, they believe that the best
way they can assist any of the communities in which they operate is to build confidence of
customers to have a successful business. That's way as the BOC Group continues to expand
and develop, one thing will never change - will always remain built around their customers.

BOC is one of the largest and most global of the world’s leading gases companies. It employs
over 43,000 people and has sales of over £4 billion. For more than a century BOC’s gases
and expertise have contributed to advances in many industries and aspects of everyday life,
including steel-making, refining, chemical processing, environmental processing, welding
and cutting, electronic health care etc.
Transformation: BOC focused on delivering customer satisfaction and increasing
shareholders return so the company explored new sources of customer value and new
channels through which it could be delivered. The challenge was to deliver this value whilst
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driving out cost; web based customer service was identified as a means to this end. BOC
engaged Axon to develop a Global Customer Portal through which to offer both expertise to
support customers and transaction to reduce cost. Highly valuable information is now
available to BOC customer according to their industry, application and user profile. The
solution is built on SAP foundation thereby directly integrating customer activities with those
of BOC.
All the business are scattered in sixty countries around the world which are grouped into four
geographical regions:
1. Asia/ pacific region
2. America
3. Europe
4. Africa

CHAPTER –3 (THREE)

ORGANIZATION PROFILE - BOC BANGLADESH LIMITED

3.1 BOC Bangladesh Ltd.

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BOC Bangladesh Ltd. is one of the leading multinational companies operating in Bangladesh,
60% of its share is owned by the BOC Group. BOC Bangladesh Ltd. is considered to be both
a relatively old and new company. Old because it has been around since the days of the once
upon a time British India, underwent from inception, BOC Bangladesh Ltd. remained the sole
supplier of Medical Oxygen in the country. In the mid 1970's, a nitrous oxide plant (still the
only one in Bangladesh), was imported and installed in Dhaka to provide the nation with this
anesthetic gas. A few years later, a carbon dioxide plant was bought and installed in Dhaka
and this was the very first in the country to produce dry ice. In the early 1980's, the liquid gas
plant was imported from New Zealand and again installed in Dhaka, where the demand for
oxygen proved to be concentrated.

The company has production facilities in Dhaka and Chittagong region. Company's 24 sales
centers cover the distribution of products around the entire country. The corporate Head
Office is located at 285, Tejgaon Industrial Area.

To keep pace with BOC's fastest growing region Asia, ISP (Special Product) of BOC
Bangladesh Ltd. has emphasized on special growth on sales in existing market as well as new
market. Currently Mild Steel Electrodes, Oxygen, Liquid Nitrogen, Dissolved Acetylene,
Carbon Dioxide, and Dry Ice have good market shares in ISP Dhaka. But there is
considerable scope of improvement in other products like Grinding/cutting Disk, Brass Rod
and Emery Cloth.

Table A: BOC Bangladesh's Ownership Participation in Bangladesh

Entity Share percentage
The BOC Group 60%

Investment corporation of Bangladesh (ICB) 20%

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 Bangladesh Shilpa Rin Shangstha 1.2%

Sadharan Bima Corporation 1.3%

Others 17.5%

Total 100%
Source: Annual Report of BOC 2005

3.2 Country overview : plant and office sites

The BOC Bangladesh has huge market share in Bangladesh. In simple sense it has no
competitor in Bangladesh. It has divided its market in Bangladesh into 23 regional divisions.
It has 3 production sites, 1 LPG bottling plant, 7 compressed gas stations in Bangladesh.

3.3 Name and Characteristics of the Board of director

• Mr. M Syeduzzaman – Chairman: He has been chairman of BOCB since 1992. He has
held various positions including those of permanent secretaries in the ministries of
Finance and Planning and of Principal Finance Secretary. In 2003, he was elected
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 Chairman of the newly established Credit Rating Agency of Bangladesh, a public Limited
Company for providing credit rating services to financial and non-financial organization.
He received his M.Sc. in Physics from Dhaka University, went to St. John’s College,
Cambridge, U.K and obtained an M.A in Development Economics from William College,
Mass., USA
• Mr. Walliur Rahman Bhuiyan - Managing Director: He has been in this position since
1998. He was the president of foreign Investor’s Chamber of Commerce & Industry for
1999-2001 & 2001-2003 and is a director of Chittagong Exchange Stock Exchange Ltd.
He obtained a Masters in Economics and an MBA from Dhaka University.
• Mr. Michael S Huggon – Director: He has been in this position since 2001. He was
appointed as a Managing Director for ISP (industrial and special Products) in Asia in
October 2003 in addition to his existing responsibilities for South Asia.
He was graduated as a chemical Engineer from Brunel University (London) and obtained
a postgraduate Diploma in Marketing.
• Mr. Sanjiv Lamba – Mr. sanjiv Lamba graduated from St. Xaviers College,cKolkata,
with a B.Com (Hons) degree in 1987. He qualified as Chartered Accountant in 1989 from
the Institute of Chartered Accountants of India.

The other respected board directors are having superior experience in their respective
field with high educational qualification. The name of those board members are as
follows:
• Mr. Andrew P Gardener – Director since 2007
• Mr. Z H Khondaker – Director since 2000
• Mr. latifur Rahman – Director since 2006
• Mr. Mohammad Farasuddin – Director since 2003
• Mr. Azizur Rashid – Director since 1999
• Mr. Erphan S Matin – Joined the Board of Directors in January 2008

3.4 Responsibility and Authority of Different Personnel:

1: Chief Executive Officer (CEO)

CEO is the overall in charge of all business activities of the company.
2: head of Business (HOB)
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 HOB is the responsible for all marketing and sales functions of electrodes and overall
responsible for production, maintenance and technological aspects of manufacturing of
electrode.
3: Head of Area (HOA)
HOA as functional head of the locations under him & is responsible for selling
functions of electrodes in the offices.
4: Head of Territory (HOT)
HOT as in charge of location, is responsible for contract review requirement in his
territory.
5: Head of procurement (HOP)
HOP is the responsible for releasing guidelines of purchase function as purchase
manual.
6: Head of Training (HOTR)
HOTR is responsible for releasing personnel manual.
7: Head of Safety (HOS)
HOS is responsible for creating safe and suitable working environment.
8: Head of Factory (HOF)
HOF is responsible for availability of electrodes at all sales centre ensuring quality,
safety and productivity.
9: Head of Quality (HOQ)
HOQ is responsible and authorized for preventive, planned and break-down
maintenance system for the factory.
10: Management Representative (MR)
He is responsible for maintaining quality system as per ISO 9001:2000 standards and
ensuring its application as per the documented system.
As the secretary of management review committee, he is responsible scheduling,
coordinating and organizing the management review meetings for assessing the performance
of the quality system.
He is also responsible for the liaison with the external certifying agencies in relation
to certification and consultancy.
11: Shift maintenance in charge (SMIC)
SMIC is responsible for carrying out preventive and planned maintenance, in process
and find quality inspection while working in shift. He’ll assist HOQ in analyzing breakdown
maintenance works, receiving inspection and statistical data analysis.
12: Sales and Applications Manager (S&AM)
S&AM is responsible for technical and market development functions of welding
business. He will provide marketing services support to HOAs / HOTs and technical services
support to HOF. He will assist HOB as the case may be.
13: Marketing Services Officer (MSO)
MSO is responsible to provide marketing support to the territories, he’ll assist S&AM
as the case may be.
14: Welding Training Manager (WTM)
WTM is responsible for overall activities relating to welding training centre.
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3.5 Mission, Vision and Goal

Like any other organization, the corporate mission statement is a key indicator of how an
organization views the claims of its stakeholders. It describes how a company intends to
incorporate stakeholder claims into its strategic decision making thereby reduce the risk of
losing stakeholders support. As a result, in its mission statement a company makes a formal
commitment to its stakeholders, sending out the message that its strategies will be formulated
with the claims of those stakeholders in mind.
So, let’s have a look into the mission statement of BOC Bangladesh Ltd (The Linde)
Mission: We shall be recognized as the leader in all the business sectors in which we
compete in Bangladesh. We want to be the leading global gases, and engineering group,
admired for our people, who have provide innovative solutions that make a difference
to the world.
Our success will be built on our absolute dedication to the satisfaction of our customers,
through constant innovation, operational efficiency, cost effectiveness and the talents of
our people. We shall always apply high standards of integrity and responsibility in our
activities.

From the above mission statement, we would find out the following major elements:
1. In the first paragraph, the declaration of the overall vision of the company
2. Summing up the key philosophical values that the management is committed and
which would influence the decision that they make. And finally
The articulation of key goals that management believes must be adhered to in order to attain
the vision, which they are committed.

CHAPTER – 4 (FOUR)

ORGANIZATIONAL STRUCTURE OF BOCB:

BOC Bangladesh mainly uses a functional departmentation. It comprises of the following

departments:
• Welding Business
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• Gases Sales
• Gases Operations & Engineering
• Finance & Accounts
• Human Resource & Administration
• Business Assurance
• Supply Management
• Information Management or IT

BOC Bangladesh considers the first two departments as its business function, i.e. Marketing
& Operations. The rest of the departments are considered as enabling function i.e. functions
that provide all the necessary support and services to the business functions for them to
complete their core objectives.

Brief descriptions of these departments are given below:

4.1 Welding Department:

Welding products namely ms electrodes is the major bread earner for BOC Bangladesh. It
contributes around 60% of the company's total revenue. Competition is stiff in this segment,
not only from local manufacturers, but also in the form of imported electrodes.

The Company is currently capable of producing about 13 thousand MT of welding electrodes

per year. Its product folio and services include welding electrodes, gas and arc welding
equipment and accessories, welding training and services. At present BOCB owns and
operates state of the art plants in Rupganj. Moreover, Welding business received ISO 9002
certification in 1996. A distribution agreement has been signed with world class welding
Company, the Lincoln of USA.

BOCB’s main advantage in this business segment is its wide distribution network that allows
it to send its products to all corners of the market as well as its goodwill which is very
important, considering that all other brands sell at a significantly lower price. BOCB has been
able to sustain as the market leader through its quality product line and highly effective
distribution network.

• Mid Steel & Cast Iron Electrodes

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• Low Hydrogen/Low Alloy Electrodes
• Stainless Steel & Bronze Electrodes
• Arc Welding Equipment & Accessories
• Spot Welding Machines
• MIG Welding Equipment &

4.2 Gases Sales Department:

BOC Bangladesh is a truly market driven & customer focused company. This basically
means that BOCB's core business is concentrated through cylinder gases and associated
equipment and specialized services, both industrial and medical. Overall this department is
headed by the General Manager Marketing.

The list of gaseous products of BOC Bangladesh Ltd. is given below:

Gaseous Product
° Compressed Oxygen
° Liquid Oxygen
° Compressed Nitrogen
° Liquid Nitrogen
° Dissolved Acetylene
° Carbon Dioxide
° Dry Ice
° Argon
° Lamp Gases
° LPG
° Refrigerant Gases
° Hydrogen
° Compressed Helium
° Liquid Helium
° Sulphurhexafluoride
° Sulpher dioxide
° Special gases & gas mixtures
° Gas Welding Rod & Flux

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° Gas Welding and Cutting equipment
Gases are one of the core products of BOC Bangladesh Ltd. A significant contribution to the
total business comes from ASU gases and Dissolved Acetylene.
The biggest market of gaseous products is in Chittagong and customers are ship breaking and
scrap cutting industries.

Competition within the gases industry is mainly local, but is quite significant for BOCB.
Local competitors have the advantage of low overheads, minimum safety standards, but
BOCB counters them through higher grade product and consistency in quality and quantity.

4.3 Medical & special Products Business

The Medical Product Division of BOC Bangladesh Ltd. provides Medical Gases and
Equipment also promoting liquid medical Oxygen and many other health care products.
Although small compared to the industrial segment the medical segment is highly profitable
for BOC Bangladesh. BOCB is still known today as the organization that produces and sells
life saving medical oxygen.

BOCB is also the local agents of some of the worlds leading medical equipment
manufacturers e.g. Datex Ohmeda, Tyco Healthcare, Fisher & Paykel etc. BOCB's medical
product line includes but is not limited to the following:

• Medical Oxygen
• Nitrous Oxide
• Entonox
• Sterilizing Gases
• Medical Gases Cylinders
• Anesthesia Machines
• Anesthesia Ventilators
• ICU/CCU Ventilators
• ICU/CCU Monitoring System
• Infusion/Syringe Pump
• Pulse Oxy-meter
• Nerve Stimulator
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• Blood Gas Analyzer
• Electrolyte Analyzer
• Infant Warmer
• Photo therapy Units

There are Regional Managers and Area Managers responsible for sales and market growth in
their respective areas. These areas are further divided into smaller territories, for which the
responsibilities lie with the Head of Territories.

This Marketing Heads, along with regional/area managers, and business development
managers set the course of direction, which are then implemented by the Head of Territories.
Overall BOC Bangladesh believes and installs the following ideals in all its marketing and
sales personnel which may be considered their driving force towards reaching a total
customer focus and satisfaction level.

• Our Customer is the most important person in our business.

• They are not dependent upon us, we are dependent upon him/her.
• Our Customer is not an interruption of work  he/she is the purpose of it.
• They do us a favor when he/she buys from us  we are not doing him/her a favor
• Our Customer is an integral part of our business  not an outsider.
• The Customer is not a cold statistic  he is a flesh and blood human being with feeling
and emotion like our own.
• Customer is not someone to argue with or match wit with.
• Customer is one who brings us his/her wants  it is our job to fulfill his/her need.
• The customer is deserving of the most courteous and attentive treatment to the point of
obsession.

4.4 Gases Operations Department:

As a pioneer multinational company in the gases business, BOC Bangladesh limited has 3
major locations/installations at Tejgaon, Rupganj, and Shitalpur. The Company is currently
capable of producing about 80 tones of liquid ASU gases per day. Its product folio and
services include liquid and gaseous oxygen and nitrogen, argon, acetylene, carbon dioxide,
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dry ice, refrigerant gases, lamp gas and other gas mixtures, medical oxygen, nitrous oxide,
entonox.

BOCB Operations department has the critical task of providing support in the form of smooth
production of manufactured products as per the demand pattern of the market. At present
BOCB owns and operates state of the art plants in Rupganj, Tejgaon and Shitalpur. In order
to meet customer demand through out the country BOCB also maintains and operates seven
oxygen compressing stations in
• Tejgaon, Postagola
• Narayanganj
• Rangpur
• Khulna
• Sagarika & Shitalpur

The operations department is responsible for production maintenance of plant, installation of

new plant and machinery, quality and safety maintenance, operations and liquid distribution,
etc. in various plants and locations.

With safety being the highest priority, BOCB operations has successfully carried out its
functions in the most optimum manner. All of its production sites are certified by the
National Occupational Safety Association (NOSA) a global safety Authority to be of
international standard. Keeping in line with the global and local environmental concerns and
acts, BOCB goes the extra step to properly dispose off its chemical wastes.

4.5 Safety Health Environment & Quality (SHEQ):

BOC is committed to managing a safe secure and healthy working environment. There are no
higher priorities for BOC than the safety of its employees, customers, suppliers, local
communities, and the protection of the physical environment in which it operates.
BOC aims to have a world class safety record in which

• Safety is a prerequisite to any business it undertakes

• Commitment to zero tolerance of any form of accidents/incidents
• Considering safety as the most important key performance indicator

21
BOC also understands that world class safety is only possible if the whole organization
embraces the safety ideologies and programs of the group. All BOC employees are required
to know what is expected of them, to support the program, and where appropriate, show
leadership in embedding the safety ideologies.

The responsibilities of implementing such a huge program lies with the local SHEQ
department in all BOCB affiliates. In striving to achieve this goal the department Works
towards complying, in letter and spirit, all relevant legal requirements, local industry
standards, codes, requirements etc. Not just that SHEQ strives to exceed the minimum
requirement and attain the bench mark position in this aspect. Furthermore it is the
responsibility of SHEQ to:

• Maintain a safe and environmentally sound workplace in all locations by effectively

managing the risks arising from business activities, products and services through the
application of BOC and industry best operating practices.

• Continually review operations and processes, creating and maintaining appropriate

programs and support structures to bring about continuous improvement in performance

• Place a duty of care on all our company officers and managers and hold them accountable
for safety, health and environmental performance against agreed key performance
indicators (KPIs)

• Ensure functional competence of all employees through on-going training, development,

communication and appraisal programs

• Work with and encourages suppliers and contractors to conduct their business with BOC
in a safe and environmentally responsible manner

• Learn from incidents and share the lessons learned with employees, customers,
contractors and other bodies as appropriate to ensure it is never repeated in future.

BOC believes all employees have a part to play in ensuring a safe working environment,
environmental protection, and product stewardship, Business improvement in line with
SHEQ objectives and support for the local community where it operates. BOC employees are
urged to bring any undermining or unsafe practices to the attention of their supervisor, their
local safety committee, SHEQ representative or the BOC Helpline.

22
Officers and managers have special responsibilities in terms of SHEQ ideologies. To ensure
BOC employees meet their health and safety goals, those who supervise others must make
sure their employees and contractors have adequate training, and that they understand that
they have a duty to act at all times in harmony with the tenets and spirit of this policy.

The SHEQ department has a global and local responsibility. BOC’s safety, health,
environment and quality (SHEQ) department plays a critical role in implementing strategies
to pre-empt or remediate health, safety and security risks in BOC workplaces around the
world.

Importance of Safety in BOC

“Safety is 100% of our behavior and 100% of the time”.
“There is no higher priority in BOC than safety”.
- Tony Isaac, BOC group CEO
“If you cannot manage safety you are not managing anything”.
- John Bevan, Chief Executive, Asia
“There are no higher priorities for us than the health and safety of our employees, customers,
suppliers and protection of the environment.”
- Waliur Rahman Bhuiyan, MD, BOC Bangladesh Ltd.
It is crystal clear from the above speeches about the stand of BOC for safety. This policy is a
key part of BOC’s overall strategy and is reviewed on a regular basis by the BOC group
executive management board.

4.6 Supply Management Department:

Supply chain management/commercial operations are the driving force of our business. It
primarily deals with the purchase and insurance activities of the Company. BOC has
enhanced its functional capability so that they may work closely with the sales and marketing
department to deliver better value to our customers.

All over the world, BOC LOBs are focused to delivering better service at lower operating
costs. They concentrate on delivering what customers want, drive to provide a more cost-
effective service and improve the competitive position in existing markets as well as
enhancing ability to attract new customers.

23
This high quality service commitment to customers demands a dedicated and highly efficient
Supply Management team. Close to 60% of BOC's world-wide revenue is spent with our
suppliers. At this level of expenditure our organization is presented with several special
opportunities.

BOC’s Supply Management group is charged with the responsibility of exploring and seizing
each of these opportunities for the benefit of BOC, its employees, customers and its
shareholders. Managing this level of cost is critical to the health of our organization to the
point where, when it is performed to a world class standard, it can deliver improved financial
performance, competitive advantage, differentiation and added value both now and in the
future.

Increasingly, BOC is integrating its sales, marketing and customer services functions. An
integrated commercial operation provides a new platform for managing relationships with
both existing and new customers and for focusing resources on adding real value.

BOC’s commercial operations are carried out within a matrix management structure.
Working in teams, our people are given a high level of empowerment and a wide degree of
scope within the framework established by our corporate principles and philosophies.

Mission of the Department

To ensure timely procurement of capital machinery, raw materials, chemicals,
spare saleable items and all other items needed by the company from both of the local and
international market along with necessary insurance cover in strict conformity with laid down
standard and quality in the most cost effective manner.

To ensure supply chain planning and its execution that yield higher customer
satisfaction with no loss of states, ensured supply, lower inventory level and improve
coordination and collaboration among supply chain partners.

4.7 Human Resource Department:

Apart from the traditional HR function of training, recruitment, performance appraisal, salary
and compensation, functions the Human Resource Department is steadfast to become part of
24
the HR leadership in the global context with nearly 43,000 people in Europe, the Americas,
Africa and the Asia/Pacific region

At a practical level, BOC's Human Resources focus is to place the right people at the right
business units, and work in real collaboration with their peers strategically shaping the
business goals both globally and locally. In its larger operations and geographies, HR
leverages its resources through a shared services organization, which has the functional
capabilities needed to ensure the objectives of the key business initiatives are achieved.

BOC HR measures its success in terms of outcomes and looks proactively for opportunities to
make a difference at BOC. BOC values highly the rich ethnic and cultural diversity of its
people. It proudly champions a set of unifying values and principles, and strive to build on
the qualities inherent in different cultural environments by encouraging people with different
views, styles and approaches. BOCs global HR team offers many opportunities for career and
personal development and, as an organization that aspires to excellence; HR is committed to
recognizing and rewarding its achievement.

4.8 Finance Department:

BOC Bangladesh, as part of the BOC Group has set itself demanding targets as part of an
aggressive growth agenda that is being pursued actively by all parts of the group - and by
none more so than its Finance team.

The Finance team has a crucial role to play in, first, funding our growth strategies;
second, streamlining the balance sheet; and third, optimizing working capital. To ensure that
we are able to accomplish these tasks BOC replaced the traditional 'functional' model with a
brand new methodology designed to meet our future needs. It satisfies three key objectives:

• to provide effective decision-making

• support to our businesses;
• to deliver accounting and financial reporting services via dedicated teams; and
• to meet customers' needs using best operating practices.

BOC's Finance organization is now structured into three groups.

25
Financial Management teams work inside the business units, providing them with planning,
business modeling and investment and performance management services. Working as part of
the management team, their task is to evaluate project and acquisition proposals, as well as
providing the means for the businesses to implement their strategies.

Financial Services Centers, which will soon all be linked by a global SAP ERP
system, have been established in the UK, the USA, Australia and South Africa. In each
location BOC has introduced new business processes and team-based structures that underpin
a culture committed to delivering high quality service.

The regional teams work closely with the businesses, and their performance is measured
against business needs and expectations to ensure that they are delivering the service
required. In addition, BOC's Financial Service Centers will be among the first in the world to
deploy SAP's new Business Warehouse module, a sophisticated technology that will provide
management information at unprecedented levels of detail and comprehension. All these
groups are supported by the Finance team based at our UK Corporate headquarters. Overall
BOC's Finance function provides financial expertise to our businesses within a highly diverse
cultural matrix that is united by global standards and procedures.

4.9 Information Management or IT Department:

BOC’s business units and functional teams all operate within a network of global policy
frameworks - but nowhere is the impact of global operations felt more acutely than in BOC's
Information Management (IM) function.

BOC operate in some 60 countries at locations from Texas to Thailand and from Quebec to
Queensland. So making sure that we have an effective, cost-efficient global infrastructure and
applications organization is a massive challenge. But technical capability is only half the
story: BOCs IM services are driven through close contact with its business organizations,
ensuring that the solutions we provide meet their real business needs.

More generally, BOCB IM professionals are responsible to provide systems and services that
will allow its businesses to grow and succeed in their markets. In pursuit of this goal, IM
strives to be responsive, resilient, continuously improving and supportive of change.
26
Electronic commerce is one of the key drivers of BOC's growth strategy and it is focused to
work closely with the businesses to ensure that all regions exploit all appropriate e-commerce
opportunities.

Our IM Services Group is responsible for developing, implementing, maintaining and

operating all of our systems and services within our firewall. This group's work is primarily
focused upon our global deployment of the SAP ERP system.

Strategy Services is responsible for developing and maintaining an integrated hardware and
software strategy. This group also works to identify trends and opportunities that we can
exploit to benefit our businesses.
The Shared Services team is the primary interface between IM departments and our user
communities around the world. They are also responsible for performance and satisfaction
measurements and for building capability in personal productivity tools.

A separate IM group is responsible for developing strategies to support individual countries

and 'country clusters', which make significant contributions to our profitability. The enabling
functions, Finance, Human Resources, Supply Management and SHEQ, are also supported by
a dedicated IM team.

Overall, inter-department cooperation and idea sharing allows BOC Bangladesh to move
forward as a dynamic and customer oriented organization.

CHAPTER – 5 (FIVE)

STRATEGIC ANALYSIS

5.1 Company Strategy

Before narrating about the strategy that BOC Group follows it is very much crucial to
identify the strategic planning process. The process is described below:
Usually, the long-term strategies are set Globally by the EMB (Executive Management
Board) and LoBheads (Line of Business Heads).

27
These strategies are based on the following attributes:
 Stakeholders demand: Stakeholders are the main source of inspiration to run the
business effectively and efficiently. So, whenever the EMB and Lo Beheads try to impose
strategy they always try to keep in mind about what the stakeholders are demanding and
try to make it feasible by realistic strategy.
 Strategic Intent: this is also vital attribute in figuring strategies. This denotes how we
want others to see us in the long run.
 BOC’s Values: ACTS (Accountability, Collaboration, Transparency, and Stretch)
CoC (Code of Conduct) and finally
SHEQ Policy (Safety, Health, Environment and Quality)
Once the above criteria are set, it is cascaded down the LoB (Line of Business) to the LoB
GM (Line of business General Manager).

Performance contracts are signed by the LoB GMs with their reporting superiors. This
contract includes Sales, Operations, Safety and other high level items.
Based on these performance contracts, the local yearly plans are developed. This performance
is measured monthly, quarterly, and yearly against this plan.
Let’s see the Strategic Planning Process through Diagram.

EMB of BOC Group

Sets Strategic Plan of

LoB s

LoB Head sets

Strategic Plan Region

LoB Region Head South

Asia Sets Strategic Plan at
County level

BOC India

28
BOC Pakistan

BOC Bangladesh
5.1.1 Business Level Strategy: Business level strategy refers to the plan of action that
strategic managers adopt for using a company’s resources and distinctive competencies to
gain a competitive advantage over its rivals in a market or industry. We can describe the
strategic intent of BOC Bangladesh with Derek F. Abell’s view that process of business
definition entails decisions about

(a)Customer’s need or what to be satisfied: The main strategy that BOCB

implements in its business level strategy is to identify the customer’s need. In this regard, the
basic need for the customers is to give them quality product at an affordable rate. In order to
find strategy that would imply the term affordability BOCB was struggling to find out such
product, which would compete with the rivals and at the same time give standard product. In
this regard, this company has differentiated their product in the best possible manner. For
example, BOCB has at least 29 different types of Electrodes for different types of welding,
which denotes more differentiation in order to gain more competitive edge.

(b) Customer Group: The second strategy is the market segmentation, the way that
BOCB decides to group customers. In this regard, they have divided mainly in two ways:

1. Industrial Customers: Mainly big industries like Ananda Builders (ship making
company), Kohinoor Chemicals Ltd (Consumer item manufacturer), etc.
2. Distributor: These are resellers, who buy directly from BOCB in bulk and sell
them to the individual small customers.

(c) Distinctive Competencies: The third issue in business-level strategy is deciding

which distinctive competencies to peruse to satisfy customers needs and customer groups.

29
 The major competencies that BOCB has over its rivals are quality of the product and at the
same time distribution efficiency.

The major strategy that BOC Bangladesh follows is all about providing quality product or
services by charging premium prices. Moreover, the following strategies are being
implemented by BOC.

Who
Who is is
being
being
satisfied?
satisfied?
Customer
Customer Groups
Groups

Definition
Definitionofof
Business
Business
How Customers
How Customers What
What is is
being
being
Needs
NeedsSatisfied?
Satisfied? Satisfied?
Satisfied?
Distinctive
Distinctive Customer
Customer Needs
Needs
Competencies
Competencies

Figure: Abell’s Frame work

Through these generic features BOCB has perused Differentiation Strategy, in which the
objective is to achieve competitive advantages by creating a product that is perceived by
customers to be unique in some important aspects. For this strategy, BOCB is still able to
charge premium price over its competitors in Bangladesh. And people are accepting their
product because of this broad differentiation. BOCB has around 29 electrodes all the
important to its destined sectors. Moreover, it has related machineries, which are superior in
performance and produce high quality welding.
As a result of those differentiation it has developed superior brand loyalty for those products.
Also, it has reduced the threat of substitute.

5.2 Distribution Strategy

Being manufacturer of advanced engineered welding or gas, BOCB utilizes a direct channel
strategy, selling directly to various industries and also to the distributors. Since, the number
of customers are large in this market, manufacturer (BOCB) strictly control product

30
distribution and provide customer service without the cost of utilizing middlemen in many
cases. In addition, there are several advantages to such approach, for example, direct contact
with customers provides manufacturers and promoters of this company having superior
technology with a better understanding of customers wants and needs. Also direct contact
with customers provides quicker responses to problems associated with products and changes
in the marketplace.

♦ Focusing on high growth sectors: This is the upcoming strategy that BOC is going to
implement in order to the constant growth. These areas include chemical, foods &
beverages industry,
♦ Securing and expanding technology capability.
♦ Improving the current relationship with the resellers and forming a strong bond with
them by imposing brand loyalty tools.
♦ Maintaining a firm-pricing environment.
♦ Pursuing productivity and operations efficiency.
♦ Increasing asset utilization and improving project execution.
♦ Improving cash flow generation.
Distribution cost booked as per the three business units of BOCB.
Namely:
1. Gases
2. Welding
3. Special
Variation: Cost center
Distribution Cost includes is incurred by
1. Distribution Cost-Gases
2. Distribution Cost-Welding
3. Distribution Cost-Special
4. Distribution Cost-Common

5.2.1 Distribution Cost Gases: Distribution cost pertaining to gases is booked as per the
regional concept, i.e. East and West. This helps cost responsible managers responsible for the
respective regions to get a clearer idea on their contribution to the cost centers.
The distribution cost of gases is included:
a. Distribution Cost-Gases, East
b. Distribution Cost-Gases, West
Gases Distribution within the regions is again segmented into two parts:
31
 a. Gases Business (all dist related to transferring gases products from sales centers to
customer’s premises) e.g. a hired truck taken on a one off basis at Rangpur Sales
center to deliver 80 oxygen cylinders to Parbatipur Railway station.
b. Gases Operations: (All dist related activities necessary for transferring factory
products to the sales centers). E.g. Tejgaon factory using a hired transport to
deliver 80 DA cylinders to Sagarika sales center at Chittagong. Or Rupganj using
a liquid tanker to deliver LOX (Liquid Oxygen) to Khulna Compressing station.
All costs associated with delivering factory produced compressed gases cylinders to
sales centers is associated with these cost centers. E.g. usage of a rented truck to deliver
compressed nitrogen from Tejgaon Compressing unit to Tongi sales center.

5.2.2 Distribution Cost Welding

Distribution cost pertaining to welding is booked as per the area concept. Welding business
divides the country into four areas i.e. Dhaka, Chittagong, Khulna and Bogra. This helps cost
responsible area managers of the 4 respective areas to get a clearer idea on their contribution
to the cost centers.

Distribution Cost-Welding
1. Distribution Cost-Dhaka
2. Distribution Cost-Chittagong
3. Distribution Cost-Khulna
4. Distribution Cost-Bogra
Total welding distribution, i.e. from production site to sales center and then from sales center
to customer end is considered part of marketing responsibility.
Thus in terms of welding there is no operations distribution, as well falls under the
responsibility of business.

So if,
A. Rupganj production send 5 tons of electrodes to Tongi sales that is also part
of business distribution as is
B. Tongi sales center sends 1 ton of electrodes to one of its resellers.

Distribution Cost-Dhaka

32
Distribution Cost Business-Dhaka
Own transport-welding Dhaka
Store & Warehouse Welding Dhaka

Distribution cost welding business comes from mainly two areas:

a. Own transport (if there is any transport used for welding distribution)
b. All other costs related to welding distribution incurred e.g. the depot rent where
welding products are stored, the CSA’s salary at the sales center, utilities, rented pick up cost
at sales for electrodes delivery. Hired transport cost (BRTC) used by Rupganj factory to send
bulk electrodes to sales centers etc.

CHAPTER – 6 (SIX)

MANAGEMENT PROCESS OF MITIGATING SUPPLY CHAIN RISKS

6.1 Preface

The interest for Supply Chain risks and means for handling those has been receiving immense
attention in the recent years. As companies are moving towards longer supply chains (e.g.
33
due to recent practice of outsourcing) and facing increasingly uncertain demand as well as
supply, the issue of supply chain risk handling and risk sharing along the supply chain is an
important topic. The scenario is no different in BOC Bangladesh Ltd.

As a very short-term practitioner, we are not in a position to ascertain the adequacy of

currently available managerial tools. So, we attempted to compile the contemporary theories
& suggested toolkits in the field of supply chain risk management and present the
applications & practices of similar fashion currently taking place in BOC Bangladesh Ltd.
From a purely process-based perspective, supply chain risks are principally the financial or
commercial risks arising from poor quality, sub-optimal supply chain performance, demand
volatility and shifting marketplace requirements. The popular analogy of a supply chain as a
seamless ‘pipeline’ is a useful metaphor, but in the context of supply chain vulnerability it
can be a deceptively seductive one. It reinforces the notion of simplicity by promoting the
vision of a stable, controllable, linear, self-transporting flow, hermetically sealed from
disruptive environmental forces. Unfortunately, in reality supply chains are rarely fixed,
discrete, self-propelling or self-protecting. Moreover, the adoption of lean and agile practices
(e.g. JIT-similar delivery practices) has made them increasingly reliant on the existence of a
reliable, secure and efficient communication, transport and distribution infrastructure.

When working effectively and efficiently, modern supply chains allow goods to be produced
and delivered in the right quantities, to the right places at the right time in a cost-effective
manner. Until recently the term ‘supply chain’ was not widely used beyond the confines of
academia, specialist sectors of industry and the professional management community.

6.2Types of risk:

The types of risk can be of different kind and scope. The size of the risk can e.g. be quantified
as the product of frequency / probability (rare, frequent or very frequent) and consequence
(minor, major or catastrophic).

A preliminary way to categorize the type of supply chain risk is to distinguish between:

(i) Operational accidents (such as fires and truck accidents with minor consequences),

34
(ii) Operational catastrophes (earthquakes etc, very rare but catastrophic consequences)
and
(iii) More strategic risks such as future investments in specific resources based on
uncertain scenarios (business decisions that could have major consequences).

6.3 Stage of risk handling:

The stage of risk handling can differ from risk analysis via risk assessment to different ways
of managing risks. The usual ways are:

A. Avoiding Risk: Avoid suppliers from countries where political unsuitability is severe.
Iraq, Cuba and some African countries should be avoided conceding this aspect.
Moreover, Bangladeshi Government imposes restrictions on some countries for trade and
other relations like Israel.
B. Reducing Risk: Maintaining a portfolio of suppliers, can reduce the risk of supply failure.
C. Transferring Risk: Inventory level with enough safety cushion can be maintained.
D. Sharing risks: All relevant functional departments and teams should be involved in the
risk management process through proper information sharing and planning accordingly.
This is a very evident practice in BOC Bangladesh, which is in a sense institutionalized.

BOC Bangladesh can also take different means based on the criticality and the nature of the
risk and take strategic position accordingly.

6.4 Assessment of Supply Chain Risks in BOC Bangladesh

When the scope is confined to BOC Bangladesh, the prime area in the Supply chain is the
procurement – more precisely the overseas procurement or import. Import business risks
could, from a theoretical as well as a practical perspective, include a number of different
issues. However, it will also try to encompass the issues in the internal logistics and
distribution in smaller scale.

In assessing the viability of a supply chain, there is no scope for companies often undervalue
the element and complexity of risk. Supply chain disruptions can arise from:

35
— External sources e.g. natural disaster. One of the major raw materials for BOCB is the
Calcium Carbide (the main ingredient for dissolved acetylene). China is the main source
for calcium carbide in this region. One year back, Chinese sources faced severe problem
as power crises prevailed in China.

— Internal sources e.g. failure to integrate all functions in a supply chain. In BOC
Bangladesh Ltd., the required ‘Inventory Level’ level is determined through the input
from all the relevant functional areas i.e. Supply Management, Factories and the Planning
department. If the coordination among these three teams lacks information or any other
aspect, malfunction might be obvious.

Disruptions can also result from attempts to create a more efficient, cost-conscious supply
chain environment. Many a times, implementation of ‘low-stock scenario’ can cause serious
hazards. BOC Group’s suggested benchmark for raw material inventory holding might not be
suitable for BOC Bangladesh Ltd. as “estimated Lead-time” never matches with the “actual
Lead-time” due to uncertainties in Chittagong seaport and Benapole land-port.
Usually Japanese suppliers are very accurate in their supply commitments. Still deviations
may take place. BOC Bangladesh imports cylinder valves from NERIKI, Japan. Stock
holding of valves is based on their production & delivery lead-time provided by NERIKI.
Unfortunately in a recent consignment, one of the 5 items failed in inspection. A crisis
situation could arise, which was mitigated by airfreight and the supply management
personnel were successful to pass on the extra cost of this airfreight to the NERIKI (as it was
primarily their fault). However, not all suppliers (more specifically suppliers from all
counties) are as customer-driven like Japanese.

6.5 Assessment of Risk:

Supply Chain Risk assessment is primarily concerned with the below two issues:
 Risks associated with the particular supply market (e.g. country) where the supplier is
located in. Such risks would have been identified by supplier market analysis.
 Risks related to the supplier itself. These risks should have been identified at the time of
appraising and short-listing suppliers and further refined after having assessed the chosen
supplier’s offer.

36
For the major raw materials like calcium carbide, European and Latin American countries are
the first choice for BOC Group as it suggests for its subsidiaries. However, for the Asian
members of BOC like BOC Bangladesh, BOC India, Malaysian Oxygen etc., China as a
country is much coveted for its lower price and low freight charge. The reliability-risk-cost
trade-off plays the important role here.

Nonetheless, risk cannot be totally ignored once a Purchase Order is placed on a supplier –
even if the supplier is from a country of high repute. So, it is important to regularly re-
evaluate risk for all developed vendors.
Assessable major risks are:
(i) Schedule Risks
(ii) Cost Risks
(iii) Quality Risks
(iv) Commercial and other Risks
The following are sources causing the above types of risk:
♦ Incomplete or incorrect specifications:
It may be discovered after purchase order is awarded that the buyer’s specification is either
incomplete or incorrect. This is more likely where the specification is complex such as for
import of a new High-tech Air Separation Plant for producing oxygen, hydrogen, argon ect. If
there is any change in the specification, let it be from buyer’s side or seller’s side, there is
likely to be an impact on the overall schedule.
♦ The supplier’s inputs are late
If any input to the suppliers activities are not available on time, a delay to supply completion
could result. One of BOC’s supplier for welding consumables ESAB India delayed in a
consignment where it faced shortage of metals and alloys in the Indian Market.
♦ Official Bureaucracy

The establishment of a new facility may, e.g. be subject to approval of the design by the
country’s authorities to ensure that it meets that country’s rules and regulations (e.g. in
respect of safety).

If BOC wants to import the second-hand gases cylinders, the supplier must provide a
certificate from the 3rd Party Inspection Company stating that the cylinders have at least 10
years of life. The requirement is stated in our Import Policy. Moreover, Bangladeshi

37
importers also require the ‘Certificate of Origin’ from the Chamber of Commerce of
supplier’s country.
It is very easy to underestimate the time the authorities will take to provide these certificates.
It is therefore better to get the idea about time required and set the L/C’s shipment validity
accordingly.

♦ Poor Communication
Where frequent interaction between the buyers and the supplier is required during the supply
agreement, poor communications can cause delays. BOCB sometimes faces similar problems
with some reluctant US suppliers who go through the L/C clauses for the Pre-shipment
Inspection at the last moment. So, the only remedy is to give them continuous reminders
through e-mail and fax to get the PSI done.
♦ Production problems

The suppliers’ systems or production may fail. BOC’s one supplier delayed in supplying
some equipment on the base that they were changing their information management system
to Oracle.

♦ Supplier’s cost increases

In some cases, the supplier’s costs in relation to the supply agreement may increase
significantly over what was estimated the supplier prepared his offer. Lincoln USA always
mention in its Pro-forma Invoice that the price may fluctuate at the time of final invoice, if
their purchase price of steel varies. So, in such cases they can pass on the increased costs to
BOC. However, in other cases a supplier might not be able to pass on the extra cost to
BOCB.

♦ Adverse movement in exchange rate & Inflation

This is a very common problem in Bangladesh with Taka and all import-based companies
face this problem. The problem is less with US$ but very much problematic with EUR. The
rate of increase was drastic during last two years. Inflation can create similar problem.

♦ Increase in Customs Duty

38
Increase in customs duty and other government tariffs can fluctuate the cost structure. After
every budget there is a change in cost structure. Sometimes, Government can change the duty
structure trough special SRO.

♦ Inadequate / incorrectly undertaken testing and inspection

If adequate testing and inspection is not carried out, defects may be undetected until the
equipment is delivered, or worse, put into service.
♦ Change of supplier ownership or change in the key personnel
A change of owner can bring with it a new managerial style and one which may not favor the
co-operative relationships. Similar things may happen when a key personnel is changes.
BOCB faced similar problem from a European supplier – Polsin Karbid who had to cancel
the shipment due to its ownership changed.
♦ Force majored
Such risks may have a serious impact on contract time, cost and quality. Examples include
flood, landslide, earthquake, fire, war, revolution, riot, diseases, insurrection, piracy and the
recent addition – Tsunami
♦ Other sources
There are other problems like risk of mistakes, supplier’s solvency problems, lack of
commercial awareness which also give birth to similar problems. So long, these problems
were more evident with suppliers in China, Korea etc. However, in recent days they are
improving substantially.

6.6 BOCB Management initiatives for mitigating the risks:

The Schedule, Cost, Quality and Commercial Risks are also Product and Supplier Specific.
The usual management initiatives taken by the departments in the supply chain network are
mentioned below:

6.6.1 Management of Schedule Risk/ Time Risk

39
1. BOCB maintains a comprehensive schedule for all products. Moreover, it closely
monitors the schedule through ‘Consignment position’. A sample consignment position
used is enclosed below:

Table - B

BOC Bangladesh Limited Consignment Position Report Format No :

Issue No :
Effective From :

From :
To :
CC :

Consignment Position of imported raw material/Spares/Salable Items

Actual/
Expected/actual
Expected
SL No Items Supplier L/C Date receipt date by Remarks
berthing
BOC stores
rate

40
Table - C

Indent/Order in Hand (L/C to be Establishment)

Expected/act
Indent Expected Date
ual receipt Remark
SL No Items Supplier received of L/C
date by BOC s
on Establishment
stores

Reviewed and Approved By Issued By

2. Moreover, whenever supply management team comes to know about the Hartal / Strike,
they instruct the Clearing and Forwarding agents in the ports to arrange the clearance
schedule accordingly. However, sometimes it becomes really very much unmanageable
when the Ports face Hartals. It is a most evident practice in the Benapole Landport.

3. Sales data is taken fortnightly for the major products through LMS (Local Management
Software) to keep a continuous eye on possible variables like sales increase / decrease.
And suppliers are also instructed through the ‘Purchase Order’ that they should bring
into notice if there is any problem resulting supply constrains, as soon as the problem
occurs.

41
4. For the major products, more that one ‘Developed Vendors’ are maintained in the
supplier portfolio.

6.6.2 Management of Cost Risks:

1. Usually, the price fluctuation factors are mitigated through the long-term price
contracts. For major products like MS Wire, Calcium Carbide and Blended Powders,
L/C’s are opened with 6 to 9 months tenure with multiple delivery schedules. So,
prices remain constant even during the time of price fluctuations in the global market.
The supply management team takes special effort to negotiate for a optimum price during
this contracts. If the tenure is made even longer, permission is taken for longer-tenure L/C
from Bangladesh Bank.

2. Supply markets are monitors extensively before a long-term contract is made. The supply
management team has subscribed many global information pools to get these
information like ‘Toot Pages’. Moreover, data are continually updated from major the
global Exchanges for major products, e.g. data are taken from the London Metal
Exchanges (LME) for the metal prices idea.

3. Currently, Bangladesh Bank is discouraging the ‘Forward Cover’. So, currency risks are
now kept open for the ‘spot negotiations’. Nevertheless, BOCB takes other initiatives like
it tries to import in currencies which are directly correlate with Bangladeshi Taka like
Dollars and tries to avoid fluctuating currencies like Euro, if possible.

4. When BOCB has to use direct Telegraphic Transfer (T.T.) instead of the safer way- L/C,
it minimizes financial risks by taking Bank Guarantee from an International Banks and
Reference check by the foreign counterparts (BOC subsidiaries).

6.6.3 Management of Quality Risk:

42
1. BOC Bangladesh uses the enterprise wide business software- SAP which has got the
‘Material Master’ database. So, BOCB can maintain correct and complete
Specifications for all its raw materials.

2. Besides maintaining correct and complete specifications through SAP and

communicating the same through ‘Purchase Orders’, BOC asks for Pre-shipment
Testing and Inspection wherever necessary. Usually, there is a compulsory Government
PSI is usually undertaken by Bureau Veritas and Intertek Testing Services. However, in
addition to these formal PSI, BOC specially asks for commercial Pre-shipment Inspection
for technically critical items like Vacuum Insulated Evaporators – Tankers for gases in
liquid form, new plants etc.

3. Usually, proper and adequate packing instructions are provided to the suppliers through
the Purchase Order. The instructions vary according from the items.

4. For procurement of Second hand product remaining lifecycle cost, operational viability
and other relevant parameters are explored. BOCB gets these items inspected ensuring
that at least 10 years operating life is there as per the Import Policy requirement.

6.6.4 Management of Commercial and Other Risks:

1. Arrangement of Adequate training is arranged for Commercial Awareness to the

relevant Personnel. The training, workshops and seminars (usually arranged by the
MCCI, DCCI, and Commercial Banks etc.) are regularly attended by BOC people.

2. As per the policy of BOC Group, BOC Bangladesh evaluates the performance of
suppliers through guideline called SESPA (Suppliers’ Evaluation, Selection and
Performance Appraisal). Moreover, it covers annual review of supplier’s financial
condition through the annual accounts statement analysis.

3. BOCB ensures appropriate insurance covers. There are enlisted insurance

companies like Pragati Insurance Co. Ltd., peoples Pragati Insurance Co. Ltd.,
Greendelta Pragati Insurance Co. Ltd., Bangladesh General Pragati Insurance Co. etc.

43
 Arrangement of proper Insurance cover. The marine insurance covers are taken while
the overseas imports. However, the assets of the company are also insured.

4. BOCB is always careful about their potential suppliers. They rigorously follow a
evaluation system for their local and overseas procurement. BOCB maintains
Supplier Evaluation Form (For Local Purchase) and Supplier Evaluation Form
(For Imported Items purchase).

5. Apart from maintaining the supplier evaluation form BOCB also maintains a
Supplier Record Sheet, which is shows the information regarding the supplier
performance in terms of a particular supply. This sheet results whether the supply deal
is/was acceptable or not and at the same time which supplier maintains the BOCB’s
supply standards.

The Supplier Evaluation Form and Supplier Record Sheet are enclosed in the later
pages in consecutive manner.

*Source of the Tables shown in the later pages is collected from BOCB taking proper consent with
the proper authority.

Table - D
Format No :
BOC Bangladesh Limited Supplier Evaluation Form Issue No :
Effective From :

Supplier Evaluation Form

(For Local Items)

SL
Information/Checking Point Findings Remarks
No

44
1 Name of the prospective supplier
2 Address or the supplier
3 Name of the product to be supplied
4 Other items supplied/manufactured by him
5 List of assets (if possible collect information)
6 Number of persons employed by him
7 Persons to be contacted
8 List of technical persons with details of training and
experience
9 Who are the other customers of the work shop/factory
10 Collect evidence of supply to the other company
11 If satisfied by the above information, give a sample order or
collect samples in case of raw material

12 If sample/sample order is alright in consideration of quality,

enlist him as a supplier

13 In case of supplier, timely delivery, quality of product,

comparative costing for at least three sample supplies are
considered and then he is enlisted as supplier.

Reviewed and Approved By Issued By

Table - E
Format No :
BOC Bangladesh Limited Supplier Evaluation Form Issue No :
Effective From :

Supplier Evaluation Form

(For imported Items)

SL
Information/Checking Point Findings Remarks
No
1 Name of the product to be imported
2 Name of the manufacturer or supplier
45
3 Country
4 Name and address of the local agent
5 Address with telephone number and fax Format No :
6 BOCProfile
Bangladesh
of the Limited Supplier Record Sheet
manufacturer/supplier Issue No :
6.1 Name of the core business product Effective From :
6.2 How many other the company produces? Give names of
few:
6.3 Is it multinational company
6.4 What is the market share of the company in their country
6.5 What is yearly turnover
6.6 Has it supplied any product to any organization in
Bangladesh?
6.7 Address of their customer in Bangladesh? Name of the
product sold to them
6.8 How many transactions made to them in last two years?
6.9 Evidence of supply to the other customers
6.1 Who are their international customers, collect their address
0
7 In case agent appointment; evidence of giving agency to the
applicant is necessary
8 If HOC is satisfied with the description from SL No-1 to 7,
he would ask for sample
9 Analysis of sample and product is made by operations
department
10 If sample analysis is ok the supplier is enlisted in the
supplier list
11 Supplier would be told to submit their offer during next
procurement

Reviewed and Approved By Issued By

Table No - F
Supplier Record Sheet
(Name of Businesses/Departments)

Name and Address of the Supplier :

Item (s) Purchased from the Supplier :

SL Order Quantity Consignment Quantity of Delivery Actual Quality

No No Ordered No the Time as Delivery Acceptable/Not
46
 consignment per Time Acceptable
Order

Reviewed and Approved By Issued By

6.7 Managing the Supply Chain Risks

6.7.1 Scanning the risk bases

The creation of a risk management culture in the organization based on clear performance
requirements and lines of communication between all supply chain network members will
enhance, indeed make possible, a sound supply chain. At a tactical level, a set of activities
should be carried out to prepare for and handle disruptions.

These processes are:

I. Risk identification process, e.g. product, supplier, supply chain related

47
II. Risk assessment process, e.g. likelihood v impact v cost
III. Supply chain continuity management and co-ordination processes
IV. Processes to ensure learning from experiences.

The managerial framework categorizes the sources of risk according to perceived location of
a potential risk or manifestation of an event, i.e. into three stages:

A. Internal to the focal firm

♦ Process
♦ Control

B. External to the focal firm but internal to the supply chain network
♦ Demand
♦ Supply

C. External to the network - Environment

Conventionally supply chains have often been designed to optimize cost and/or customer
service. Given the risks to which modern supply chains are exposed this may need to change.
A number of recommendations are suggested to provide the basis for managing of supply
chains with risk reduction in mind:

6.7.1(a) Supply chain understanding

A fundamental pre-requisite for improved supply chain is an understanding of the network

that connects the business to its suppliers and finally to its downstream customers. A critical
path in the supply chain/network may have one or more of the following characteristics:

♦ Long lead-times e.g. the time taken to replenish components from order to delivery
♦ A single source of supply with no short-term alternative
♦ Linkages where ‘visibility’ is poor, i.e. little or no shared information between nodes
♦ High levels of identifiable risk (i.e. supply, demand, process, control and environmental
risk).

48
Following from this risk assessment exercise should be the creation of a supply chain risk
register where the vulnerabilities of critical nodes and links in the network are noted and
procedures for their monitoring and subsequent mitigation and management are defined.

6.7.1(b) Supplier base strategy

Whilst there has been a move towards the reduction of the supplier base, there may be limits
to which the process should be pursued. Single sourcing, where one supplier is responsible
for the supply of a specific item or service, may be advantageous from a cost and quality
management perspective, but is dangerous in terms of supply assurance.

Whilst it may be desirable to have a lead supplier, wherever possible alternative sources
should be available. Where a firm has multiple sites it may be possible to have a single source
for an item or service into each site thus gaining some of the advantages of single sourcing
without the downside risk. Similarly if a manufacturing firm makes a range of products it
may be possible to single source by product thus keeping an alternative source of supply
available. It is strongly advocated that one of the key criteria for the selection of suppliers
should be the risk awareness of the supplier.

6.7.1(c) Design principles for optimum supply chain

A number of principles have emerged which should be considered while (re) engineering
supply chains to improve assurance like choosing supply chain strategies that keep several
options open. This may not be the lowest cost course of action but may be the lowest risk.
Thus a strategy that is based around lowest cost option - could also shut down other options
and hence increase vulnerability.

6.7.1(d) Supply chain collaboration

A high level of collaborative working across supply chains can help significantly to mitigate
risk. The challenge is to create the conditions in which collaborative working becomes

49
possible. The underlying principle of collaboration in the supply chain is that the exchange of
information and application of shared knowledge can reduce uncertainty.

At the tactical level the knowledge required is specific to the assessment of risk to current
operations, primarily in the areas of:

A. Demand, e.g. market volatility; product life cycle creating subtle Supply Chains
B. Supply, e.g. lead-times; supplier consolidation
C. Process, e.g. bottlenecks; variability
D. Control, e.g. lack of visibility; poor data integrity

The operational level pertains to the day-to-day management of the business. The emerging
field of supply chain event management is potentially of great value in managing operational
disruptions.

6.7.1(e) Agility – responding to change

Supply chain agility can be defined as the ability to respond rapidly to unpredictable changes
in demand or supply. BOC Bangladesh will be at risk if its response time to demand changes
or supply disruption is too long. Agility has many dimensions and it relates as much to
networks as it does to individual companies. Indeed, a key to agile response is the presence of
agile partners upstream and downstream of the focal firm.

6.7.1(f) Supply chain visibility

Supply chain visibility is the ability of all members of the supply chain to see from one end of
the pipeline to the other. Visibility, for example, implies a clear view of upstream and
downstream inventories, demand and supply conditions, and production and purchasing
schedules with clear lines of communications and agreement on ‘one set of numbers’.

Lack of visibility forces supply chain managers to rely on forecasts and build intervening
inventories (i.e. buffers), which do not correspond to actual demand thus worsening the
situation. These intervening inventories are usually created independently of each other as a
result of members of the supply chain not having detailed knowledge of what is happening in
the rest of the network, e.g. information on finished goods inventory, materials inventory,

50
work in progress demand, capacity, order status and so on. Visibility will be further distorted
by the presence of the bullwhip effect that can magnify small changes in marketplace
demand, as it will move back up the supply chain.

Considering the above - creation of effective multi-functional teams is considered to be the

best option for BOC Bangladesh. Established systems like “Consignment Position
Reporting” is available which ensures that all the teams in the supply chain network like
Sales, Production, Planning, Distribution and Supply Management knows the total material
flow (including raw material and sellable items) for common understanding. This practice
ensures that no decision is taken in isolation.

However, a supply chain risk management team can be created within the business and
charged with regularly updating the supply chain risk register and to report to the Executive
Management Committee on a periodical basis. The team will need to be cross-functional and
to be able to audit risk using the tools.

6.7.2 Toolkits for Supply Chain Risk Management

The following are some chosen tools for fighting the supply chain risks:
• Supply Chain Mapping
• Pareto Analysis
• Process Decision Program Chart

6.7.2(a) Supply Chain Mapping

Supply chain mapping is a conceptually simple and very powerful technique. It provides a
time-based representation of the processes involved as the materials or products move
through the supply chain from, for example, the raw materials supplier to the end user.

The map will also show the time that is taken at various points along the chain including time
when the materials or products are waiting, i.e. as work in progress or finished goods.

Using this tool, supply chain team can determine:

51
A. The inter-connecting ‘pipeline’ of suppliers through which products, components and
materials must travel to reach the end-user.
B. The transport links by which products, components and materials are passed from one
node to another in the chain.
C. The amount of work-in-progress and inventory stockpiled at each stage in the pipeline.
D. The time it would take to source replenishment from various points in the pipeline in the
event of disruption.

The resulting information can assist supply chain team to identify areas of risk and take
appropriate actions, including:

♦ Determining alternative sources of supply

♦ Decisions to hold additional “just in case” inventory
♦ Contingency plans regarding alternate transport arrangements in the event of disruption
♦ Decisions to hold inventory in a form in which it is most flexible, e.g. un-drawn MS
Wire, rather than drawn.

The following is a similar supply management activities map prepared for BOC:

52
Supply Management Activity Map

Inquiry

Identify inquiry type

import, export cum

import, local purr.

If vendor Inquiry for

known quotation
NO Quotation
Evaluatio
YES n
Decision
Approved
for selection
Vendor
Database YES
NO

proforma Invoice

Comparative
Statement

If foreign LOA is LPO raised

purchase checked
NO
YES
Copies for
Advance Approval by
Distribution
CIG higher authority

If Goods send If lubricating

Forwarded to
Goods received by vendor Oil
Indenture
YES NO
NO YES
Ask for
Decision of Bill send to Advance check
delivery order
Approval Finance from Finance
NO YES
Pay order advice
If third Get cash from
Contact Inspection from Finance
party Inspection bank
required agency
YES
Arrange transport Payment Order
NO to collect from Bank
Preparation of
purchase order
Carry letter to oil
company

Obtain delivery
permission

A
collect from
Depot.

53
 Supply Management Activity Map (Cont.)
A

Ask bank to
openLC

Copies for
Distribution

Attach form B to
If explosive,
fill up by vendor
e.g. cylinder
YES
NO
Appr. proforma,
OPO,LC etc. send
to vendor

Follow up the
shipment

Proforma invoice If ammenmend Letter to bank

LCA fillup for increase value serious for revision
ammenment normal
/value change 5min. ammendment
Inform vendor
Forwarding to Received advance
after receiving
bank for copy from vendor
proforma
increase value
as & when

Revised with the

Checked if OK vendor
with OPO,LC NO

YES

Send photocopy to
insurance company
and ask for bill

If explosive,
Permission from
e.g. cylinder
Explosive dept.
on form B
YES
NO
If bank
received original
documents

NO
YES Endorsement for
Retired memo Original document shipping guaranty
retired with from bank
send to balance payment
Finance

If
Endorsement ammonium
against block list nitrate
from drug admin. YES

NO
C B

54
 Supply Management Activity Map (Cont.)

C B

Forwarded to C&F
agent for goods
clearance

Follow up C&F
agent for custom
clearance , dist.

Negociate with Negotiate with Complain to NBR

Port on handling If problem Custom & follow up
If not solved
& other matter
YES YES
NO
NO
Goods received If not solved
to godown
NO
YES
Discrepancy, Review with NBR
Inspection report Checked if any & follow up
As & when receipt YES non compliance

NO
Claim lodge with
inspection report Claim to vendor GRN received If not solved
& support paper Vendor or insurance from the store
as & when NO
Insurance YES
Check if Refereed to P&A
Follow Up insurance bill Insurance bill C&F bill send for suit & follow
is paid send to finance to finance
NO no time limit
YES -special case
Insurance claim
lodge
When original
docs. received
late by Bank

Meeting
If disagreement Follow up when
YES bank receipt
original document
NO
If
site observation
Original document
needed Visiting the sites
retired with
YES balance payment
NO

Follow up
Retired memo

Receipt of
If settled payment
YES

NO

55
6.7.2(b) Pareto Analysis
Pareto Analysis, sometimes referred to as ABC Analysis, is a decision support tool that aids
in prioritizing problems and issues to be tackled.

Pareto Analysis is aptly described as the ‘80:20' rule, i.e. the case might be that 20% of the
vendors account for 80% of the supply, or that 80% of the purchase is accounted for just 20%
of the products / product-line. The scenario is no different in BOC Bangladesh. Although
there are thousand of raw materials procured for the operations, only 3 to 4 items like MS
Wire, calcium Carbide, Ammonium Nitrate and Blended Powders will account for more than
80% of the raw material purchase.

Rather than scatter scarce resource across a wide range of problems and issues, Pareto
Analysis can guide their deployment to where they will have greatest effect. Pareto analysis
is probably most effective when combined with the outputs of other tools such as
Benchmarking, Statistical Process Control, Supply Chain Mapping etc.

Applying Pareto Analysis to the analysis of supply chain, SCM Team can:

A. Rank the various risks and potential dislocation points in their upstream and downstream
supply chains according to their severity of impact, probability of occurrence, or cost of
remedial action

B. Allocate either remedial resources or time spent on further analysis to those areas and
issues where they will have greatest effect in improving the overall supply chain.

Basically, to capture all the possible supply chain risks for all product-lines and getting
prepared for handling all these problems need a huge manpower. Usually for companies like
BOC Bangladesh who emphasize on high efficiency and productivity, this Pareto analysis
can play an effective role.

6.7.2(c) Process Decision Program Chart

A Process Decision Program Chart is a tool for use in contingency planning. Essentially, the
Process Decision Program Chart diagrammatically depicts what might go wrong at particular
points in a process or chain of events, and presents alternative countermeasures showing how
56
those disruptions might best be countered. While conceptually and operationally both very
simple and straightforward, the technique yields a wealth of resilience-promoting
information. The technique is essentially brainstorming based and resource intensive.

Using Process Decision Program Charts, SCM Team can:

♦ Identify the causes and contributory factors, which may bring about disruption in the
supply chain.
♦ Prioritize these into a hierarchy for action aimed at eliminating or ameliorating them
♦ Determine the decision points at which alternative sources of supply, transport, storage
location or process would be most appropriate, supplementing these where necessary.
♦ Identify - as a side-benefit - opportunities for supply chain improvements by process
simplification or eliminating non value-adding operations
♦ Determine the sequence of operations or events that represents the conceptual “path” that
minimizes risk throughout the supply chain
♦ Determine in advance of any disruption those actions that can once more restore normal
operations as quickly as possible.

6.8 Specific Actions for BOC Bangladesh

Checklists for Management Decisions affecting Supply Chain

A wide variety of supply chain management tools, techniques and higher-level principles can
be utilized within the networks to identify, manage and mitigate the effects of risk within the
supply chains. The tools were well known managerial devices, appropriate for one or more of
the following three categories of supply chain management activity:

♦ Supply Chain Planning

♦ Supply Chain (Operations) Management
♦ Supply Chain Change Management.

57
The first two, Supply Chain Planning and Supply Chain (Operations) Management share the
basic assumptions and corresponding time-horizons of long-term ‘strategic’ and everyday
operational’ supply chain management respectively. The third corresponds with medium-term
‘tactical’ refinements and incorporates elements of the previous two. Taken together the three
categories describe a spectrum of supply chain management activity.

Supply chain change management represents the times when planned modifications to
existing supply chain processes are implemented. Many of the managers felt that supply
chains were most vulnerable during periods of change, as the risk profiles affecting their
supply chains were also changing. The following is a suggested check-list for the managers in
the supply chain network to ensure that risk-management approach is undertaken any
strategic management decision:

SET 1
♦ Trade-Off Analysis to achieve lowest total process cost.
♦ Situational awareness - to understand quality and delivery cost pressures on direct /
indirect customers / suppliers.
♦ Process relationship analysis.

SET 2
♦ Supply Chain Mapping – inventory, process capacities/capabilities, lead-times (intra /
inter-process / organization) and lead-time flexibility.
♦ Design supply chain for maximum simplicity.

SET 3
♦ Supplier Quality Audits.
♦ Analysis of past performance.
♦ Supplier's Risk Management Audits.
♦ Supplier capability assessment – effectiveness and efficiency.
SET 4
♦ Lessons learned feedback and corporate knowledge database.
♦ Process innovation.

58
♦ Supplier Development Program.

SET 5
♦ Temporary inventory, capacity and capability process buffers to create management
space.
♦ Lean manufacturing techniques, to benefit from higher resources utilization and lower
inventories.

SET 6
♦ Contingency funds for impact of risks.
♦ E-Commerce techniques to improve demand data transmission and reduce costs.
♦ Current supplier database – cost, qualified components' characteristics, capabilities and
performance.
♦ Shared supply chain management data

SET 7
♦ Supplier quality review.
♦ Standardized quality requirements.

SET 8:
♦ Inventory, capacity and capability process buffers.
♦ Project plan, including milestones.
♦ Critical Path Analysis.
♦ Risk Register informed by supplier key performance indicators (KPIs) and reviews.
♦ Root Cause Analysis.
♦ Continuous staff training to maintain effectiveness of current tools.

6.8.2 Action Plans and Desired Outcomes

BOC Bangladesh can undertake “risk assessment workshops” with its major suppliers (who
are termed as strategic partners by BOC – nor mere suppliers) during their visits in
Bangladesh. The aim could be to identify risks collectively and agree the risk profile for each

59
major supplier. Even if it is not possible to meet directly with the suppliers, it is always
possible to hold meeting with their local distributors. Basically, major suppliers like has their
local distributor as well as country representative’s offices in Bangladesh.

Moreover, regional expertise can be brought from counterparts like BOC India and BOC
Group’s risk specialist for consulting skills to facilitate the workshop and challenge
established perceptions of risks. Risk scenarios should be developed to highlight critical
weaknesses in the supply chain and demonstrate the potential impact of risk events to
BOCB’s ability to service the end consumer.

The specific outcomes could be:

• Attaining a clear picture of the risk profile for each country and the potential to
impact the supply chain. At present BOCB has more than hundred overseas suppliers
who are located in countries like China, USA, India, UK, Japan, Korea, Taiwan,
Malaysia, Singapore, Taiwan, Thailand, Indonesia etc.

• Contingency plans can be developed that include collective action agreements

between suppliers. These included plans to manage the international logistics
(keeping contracts with several frights forwarder), various modes - airfreight vs. sea-
freight (which BOC can minimizes through keeping good establishments like
experienced Clearing & Forwarding agents in all the major ports). Country
contingency is also important (maintaining suppliers in more than one countries –
once an Indonesian supplier had problem in its furnace, and BOCB could
subsequently shift to a Indian supplier). Similar example can be cited for another item
Calcium Carbide – due to power crisis in China, BOC shifted to a Polish supplier.
Maintaining contingency is important for all types of service providers (e.g. Bank and
Insurance companies also).

• Further investigative work can be carried out to assess the risks inherent in major
suppliers targeted towards measuring the financial and political stability (through
tools like SESPA – Supplier Evaluation, Selection and Performance Appraisal).

60
 • Enabling the BOC’s Supply Management team to assess their own measurement of
risk appetite and assure shareholders that such issues were being managed. For less
critical items, very low inventory holding is affordable. In also depends on the
management confidence as well as target for financial cost.

• A monitoring and reporting system should be established to ensure that plans were
activated in the lead up to risk events. BOC’s Executive Management Committee can
be sent report on weekly basis in this regard.

Lastly, enthusiasm should be shown for the below issues for import business risk dealings:
• Greater use of long-term agreements with proven performance.
• Greater use of alternate suppliers.
• More use of forecasting and long-term planning sessions.
• Some (relatively slight) increases in inventory levels.

CHAPTER – 7 (SEVEN)

CONCLUSION, SUMMERY AND RECOMMENDATION

So far many tools and design techniques were discussed to battle the supply chain risks.
However, only designs would not ensure the proper management. There is quite a widespread
recognition that the existing tools would not be much effective if proper staff training is not
implemented correctly.

61
The identification of management of risks within the supply chain and risks external to it is
required through a coordinated approach amongst supply chain members to reduce supply
chain vulnerability as a whole’. However, tensions will always prevail between:

♦ Individual process performance measures

♦ The impact of strategic business decisions
♦ Constraints imposed by the complex safety-critical nature of the products and by
♦ Industry or supply chain structures.
The demands of the marketplace, constant changes in product specifications, together with
other continuous improvement initiatives within the organizations and the wider industry as a
whole leads to the fact that the supply chains never actually reached a truly ‘stable & steady
state’.
The general ideas as summarized as below:

 Cost reduction will remain as the constant theme, emerging as the principle driver behind
the universal moves towards longer, leaner, more consolidated, but potentially less
resilient networks.

 Changes in product specifications, continuous improvement initiatives, outsourcing,

internal network redesigns, changes in IT support systems and process technology, supply
base and industry consolidations all contributes to the volatility of the operating
environment.

 The management of change coupled with regulatory and geopolitical changes led to the
emphasis on planning and more change management activities.

 The connectivity between the determination of business strategy and the recognition of
the impact of these strategic decisions upon supply chain vulnerability requires more
attention.

62
 Business continuity planning tends to focus on the internal network yet the message that
needs to be understood and acted upon is that the biggest risk to business continuity may
well come from the wider supply chain (contained in the surrounding outside
environment) rather than from within the business.
The effectiveness of the risk management tools and techniques currently in use within the
supply chain/networks can only be ensured though continuous Internal Audit. In BOC
Bangladesh Ltd. ‘Business Assurance Team’ takes care of this internal audit that can also be
responsible for the supply chain risk management tools audit.
The final level in the framework is the wider macroeconomic and natural, environment within
which organizations do business, assets and infrastructure are positioned, supply chains pass
and value streams flow. Factors for consideration are the political, economic, social, and
technological elements of the operating and trading environment, as well as natural
phenomenon – geological, meteorological etc. The sources of risks emanating at this level are
likely to be beyond the direct control of supply chain managers, nevertheless the
susceptibility of the networks can often be assessed in advance, thus enabling informed
decisions to be made regarding the merits of risk avoidance or mitigation strategies.

FIG – 3 Organogram of BOC Bangladesh

Gases Business GM Gases

Region East Regional Manager

1. Sagarika
2. Shitalpur
3. Comilla
Region West Regional Manager
1. Tejgaon
2. Postagola
3. Bogra
4. Jessore

63
 5. LPG

Welding Business GM Welding

Area Dhaka Area Manager Dhaka
1. Tejgaon
2. Tongi
3. TSR
4. Narayanganj
5. Postagola
6. Mymensingh
Area Chittagong Area Manager - Chittagong
1. Sagarika
2. City Depot
3. Comilla
4. Noahkhali
5. Sylhet
Area Bogra Area Manager Bogra
1. Bogra
2. Rangpur
3. Rajshahi

Area Khulna Area Manager Khulna

1. Khulna
2. Faridpur
3. Barisal
Special Business GM Special Products
Medical Business Manager Medical

Med Central

Med East

Med West

64
 Packaged Chemical Manager Packaged Chemicals
PC East

PC West

ORGANIZATION STRUCTURE OF DIFFERENT DIPERTMENTS

FIG – 4 SALES AND MARKETING DEPARTMENT (INDUSTRIAL PRODUCT

DIVISION)

GENERAL
MARKETING
MANAGER

AREA
MARKET CUSTOMER MANAGER WELDING
DEVELOPMEN AREA
RELATIONS
MANAGER DHAKA-SOUTH TRAINING
T MANAGER MANAGER
DHAKA-NORTH MANAGER
CHITTAGONG

CUSTOMER
RELATIONS
CUSTOMER WELDING
OFFICER CUSTOMER CUSTOMER RELATIONS TRAINING
RELATIONS RELATIONS
OFFICER OFFICER
OFFICER OFFICER
TECHNICAL
SERVICES
OFFICER

FIG – 5 SALES AND MARKETING DEPARTMENT (MEDICAL PRODUCT

DIVISION)
BUSINESS MANAGER
MEDICAL PORODUCT

CUSTOMER CUSTOMER CUSTOMER AREA DISTRIBUTION

RELATIONS RELATIONS RELATIONS
MANAGER MANAGER MANAGER MANAGER
MANAGER

65
FIG – 6 COMMERCIAL DEPARTMENT

Commercial Manager

Commercial Officer Commercial Officer

Import Manager Commercial Officer

Commercial Assistant

FIG – 7 HUMAN RESOURCE DEPARTMENT

GENERAL MANAGER
(GM) HUMAN RESOURCE

CO-
ORDITION
OFFICER

HUMAN EMPLOYEE EMPLOYEE

RESOURCE TRAINING RELATION
SERVICE
OFFICER MANAGER S
OFFICER
MANAGER

66
FIG – 8 FINANCE DEPARTMENT

FINANCE DIRECTOR
CO-ORDINATING
OFFICER

MANAGER PLANNING CHIEF ACCOUNTANT

INTERNAL MANAGER
CONTROL FINANCE CO-ORDINATING
OFFICER

SHARE
RELATIO COST CORPORAT REMUNERATI
N ACCOUNTA E ON
OFFICER NT ACCOUNTS ACCOUNTANT
MANAGER

FIG – 9 OPERATIONS DEPARTMENT

GENERAL MANAGER
OPERATIONS

Co-ordition officer

Operatio
Manag Manager
ns Plant Manager
er Cryogenics
Electrodes
&
safety Distribution
Manager
Plant
Plant Engine
Plant
Plant Manage Plant Plant Manag er
Manag Manager Manager er Engineering
r Manager
er Dhaka Shitalpur Jalalabad Rupgo Manager
Khulna nj CE Maintenan
Officer ce &
Plant Plant
Quality
Officer Engineer CE
Engine 67
Administration Officer
er Maintenan
Distributio ce
n Officer Engineer
Plant Officer
Engineer Administration
FIG – 10 “IT” DEPARTMENT
IT MANAGER

BUSINESS APPLICATIONS SYSTEM

MANAGER ADMINISTRATOR

ANALYST SYSTEM SYSTEM APPLICATION

SYSTEM
SYSTEM SUPPORT
PROGAMME ANALYS ANALYST S SUPPORT SUPPORT OFFICER
R T OFFICER OFFICER

BIBILIOGRAPHY

Books
• Jain Subhash C : Marketing Planning and Strategy
• “Trapping into..Risk Management – New Strategies” Inside Supply
Management, Vol, 18, 2007 (Institute of Supply Management, USA).
• Porter Michael E – “Competitive Advantage”
• Kotler, Philip – “Marketing Management”

References and Journals

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 • Childerhouse, P (2003), “information Flow in Automotive Supply Chains –
Present Industrial Practices”, Industrial Management & Data Systems, Vol 103
• Christopher M.G (2002), Supply Chain Vulnerability, Report for department of
transport, local government and the regions, Cranfield University.
• Christopher M.G & Towill (2002) “An international model for the design of
agile Supply Chains” International Journal for physical distribution and
logistics, vol 31 No 4.
• George M.L (2002), Lean Six Sigma: Combining Six Sigma Quality with Lean
Speed, McGraw-Hill, New York.

Reports/ Manuals
• Annual Report of BOC Bangladesh Limited, 2007
• BOC Bangladesh Limited, Manager’s Responsibility Handout
• BOC Bangladesh Limited, Code of Conduct
• International Commercial Terms (InCo Terms)
Website
• www.boc.com
• www.supplychainriskmanagement.co.uk

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