Global supply Chain -COIR ON

GROUP 6

Key Areas Covered

Sourcing decisions based on demand variations Supplier relations in the coir on company Transportation policies in the supply to global markets;
raw material is coir and by products

Terms of Agreement between buyer and supplier.

Coir-on Foam Products India Pvt Ltd.

Established Scope Revenue

:Year 1986 at Pollachi of Coimbatore District, Tamil Nadu India :Marketed overseas & domestically. :USD 19 million

Product line :Rubberised Coir Products such as Mattresses

Subsidiaries : Harish Coconut Products Pvt. Ltd in 1989 Harisha Tuff Lanka Pvt Ltd in 2006

Global Sourcing
A Fundamental Strategic Objective which Coir-on adopted

Global Supply and Sourcing

The business process of identifying, evaluating, negotiating and configuring supply chains across multiple suppliers and geographies

Common Reasons for a Global Sourcing Strategy

Reducing overall cost structure Availability of new technology and capacity. Often domestic suppliers lack capacity and / or are not making the necessary investments to stay competitive. Establishing alternative sources of supply reduced risk. Access to new designs or specialized intellectual capital. Superior quality: Supplier investment in technology and capacity to attract global business. Michael R. Leenders and P. Fraser Johnson,Major changes in supply chain responsibilities,2002

GLOBAL SUPPLY CHAIN

Harish owned farms

U.S U.K

Farmers, coconut husk sourced

Harish coconut products Pvt Ltd

Coir on

South Africa

SME-coir outsourced

Latin America Coir onIsrael

Gulf countries

Sourcing Strategies-Self or Shipped

1. SUPPLIER RELATIONS

Important criteria is quality. The local suppliers dont export their products, as local suppliers lack the efficiency to export on their own.

The raw material for coir sourced from the sister concern Harish coconut products Pvt Limited.

Sourcing is necessary to meet the request of the international buyers.

2. SOURCING DECISIONS

High demand for coir products in the international market. Attributes: Fitness, price, craftsmanship, quality, attractiveness and eco-friendly nature. Increasing cost of raw material is the major threat faced by the industry .

Seasonality factor Demand is forecasted based on climatic factors. Reason: Direct impact on the fiber production, latex (rubber )

Resource and Manufacturing strategies are planned based on the market demand. High demand scenarios are countered through local farm suppliers. Workforce is scaled up when required.

Demand variations

Adaptation strategies

3. Evaluation parameters for external suppliers

In-house logistics for collecting the raw material. Heavy demand- request is sent to the local suppliers to deliver at their factory. Duly weighed at their office premises & checked for quality before processing.

Mode of transport

Supplier development:

Risk Averse: Supplies FG and coir to the dealers in major parts of India, Lakshadweep and to global markets such as US, UK, Europe, UAE and Israel.

Pricing strategy

Current market price and its fluctuations are evaluated and prices are negotiated and fixed, based on quality. Quality of products key differentiator of its pricing strategy. Impurities seemed to be the major set back for the price variation.

COIR-ON as an exporter

Coir on sources its Raw material from Harish Pvt Ltd, which constitutes only 10%
of Harish Products output.

Rest of the business-export to various markets in the form of various products.

Mode of transport/ Transportation terms of coir:

FOB destination freight prepaid. Total cost of ownership(TCO) borne by the company. Policies differ at different terminals. For example the policy and the prices
differ within India when compared between Mumbai and Cochin port.

Fiber sourced as Bales or coir pith as blocks/grow bags, on product request. The shipment basically is through Marine and cargo. Insurance policies
different for different shipments; and the insurance company varies based on the export to different countries . Coir on has different insurances for China, European countries, Sri Lanka.

Lead time: 7 days from the arrival date to the port. Demurrage charges borne
by the supplier if any.(10$per day). It is country dependent.

AGREEMENT TERMS
Company owns responsibility for the damage of goods during manufacturing.
If the damage is incurred during shipping, the Shipping liner is responsible; if its during stuffing /clearing the goods the consignee has to pay the damage.

The Contract terms include: Quantity of goods Quality Price Payment Procedures Shipping date Origin of Shipment Trans shipment details The contract term, payment details vary from consignment vendors. Based on the payment mode it is finalized whether it is (DP) direct payment, (LC) letter of credit etc.,

CONCLUSION
A vertically integrated company High Focus on Quality Strategically operated; Identified the need of perennial supply. Expanded Inorganically into Sri Lanka by acquiring Harish Coconuts Pvt Ltd. Coir-On is still in the nascent stages of Supplier relationships.

Thank You
Acknowledgements
Mr. Giridharan Manager- Operations Coir-on Pvt Ltd. Coimbatore