Name ID

Course Title: Product and Operation Management

Course ID: MGT 330
Section: 06
Submitted to:
Name
Professor, School of Business, IUB
Submitted By
Letter of transmittal

December 4, 2021

To

Name

Professor,

School of business

Independent university, Bangladesh

Subject: Submission of final report

Honorable sir,

With great pleasure we are presenting our final report on the topic “Supply Chain Management
(SCM): Its Implications on Manufacturing and Service Industry While preparing this report, we
have followed your instruction and guidelines as well as those given by my supervisor. This
report has been completed by our research that we have learn during this semester. we hope this
report to be informative as well as comprehensive.

We express our special gratitude to you for dedicating your valuable time, expert guidance and
support. we have tried my best to complete the report appropriately as much as possible. we will
be pleased to answer any sort of query you may have regarding this report.

Sincerely yours

On behalf of team

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Acknowledgement

Firstly, I would like to pay my deepest gratitude to the almighty Allah who has helped me
through all the hardships in my life and showed me the right path. It is Allah and my parents who
has helped and my journey into the vast sea of knowledge making it smoother and easier. All
my sincere and honest gratitude also goes to my respected supervisor, faculty name, who has
guided us from the very beginning of our course His inspiration and encouragement have made
me truly confident and self-dependent. His utmost efforts and appreciation have vastly
contributed to my report. All the shortcomings and weakness of this report, however are incurred
by me.

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Executive Summary
Aarong is one of the 18 social businesses of BRAC, the world's largest development
organization, and was born out of a humble desire to empower neglected rural women and help
them realize their full potential. Aarong's key success factor is that it is a social enterprise
competing with commercial local and international lifestyle retail brands.

This research will also assist in learning about managing the country's most significant backward
link for handicraft product production via rural artisans and underprivileged producers. The
research will highlight the opportunities and challenges of the handicraft-based retail sector in
promoting arts and crafts products. Aarong is a BRAC (Building Resources Across
Communities) enterprise and a CSR-based handicraft company founded in 1978. Aarong means
"village fair."

Aarong has grown from a single shop to one of Bangladesh's largest, with twelve outlets spread
across the country's major metropolitan areas, including Dhaka, Chittagong, Khulna, Sylhet and
Comilla, Narayangonj, and one in London, UK. Aarong's employees are among the most
disadvantaged people in the country. With the visionary goal to change the lives of deprived
artisans and underprivileged rural women by encouraging them and enlivening their arts and
crafts.

Aarong has employed and supported many deprived women whom being suffered terrible loss
during the liberation war of Bangladesh "Aarong" has started its journey in 1978. Aarong exports
their products to Italy, Spain, Canada, Japan, and the U.K market. Aarong has created value for
thousands of rural artisans and millions of satisfied customers domestically and abroad.

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Contents
Letter of transmittal.....................................................................................................................................i
Acknowledgement.......................................................................................................................................ii
Executive Summary....................................................................................................................................iii
Introduction:................................................................................................................................................1
Overview of Aarong:...................................................................................................................................2
Service Offerings of Aarong:.......................................................................................................................4
Benefits.......................................................................................................................................................5
AARONG’S Main Objective:......................................................................................................................6
Overview of Handicraft...........................................................................................................................8
Aarong with Bangladeshi Handicraft Industry.........................................................................................8
Good brand image/ good awareness...................................................................................................10
Strong financial foundation..................................................................................................................10
Traditional.............................................................................................................................................10
Weakness..............................................................................................................................................10
Opportunities........................................................................................................................................11
Automation...........................................................................................................................................11
Develop exports....................................................................................................................................11
Franchise ventures................................................................................................................................11
Threats.....................................................................................................................................................12
New competitors (local and global).......................................................................................................12
Market may become price sensitive.......................................................................................................12
Conclusion................................................................................................................................................12

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Introduction:

The Aarong brand is intended to evoke a closer connection to its rural roots, as the term Aarong
means "village fair." Aarong is one of the 18 social businesses of BRAC, the world's largest
development organization, and was born out of a humble desire to empower neglected rural
women and help them realize their full potential. It has been assisting BRAC in achieving its
purpose of poverty eradication through economic growth and human capacity building, with a
particular focus on women's empowerment. Aarong began in 1978 as a scheme to ensure that
poor silk farmers, block printers, and embroiderers in Manikganj, Bangladesh, were paid once
their items were delivered. The goal was to give rural artisans a place to sell their wares and
obtain a fair market price for them. Aarong began by employing a small number of rural women,
but it quickly grew. Aarong began its journey by providing employment for a small group of
rural women, but quickly expanded its support by collaborating with a variety of other artisans
and craftspeople. Aarong's key success factor is that it is a social enterprise competing with
commercial local and international lifestyle retail brands. This research will also assist in
learning about managing the country's most significant backward link for handicraft product
production via rural artisans and underprivileged producers. The research will highlight the
opportunities and challenges of the handicraft-based retail sector in promoting arts and crafts
products. It is also responsible for assessing the technical, financial, operational, creative, and
organizational competitiveness in order to produce a large number of products, as well as
identifying and targeting potential markets. It will also help to understand how competitiveness
is defined here as entrepreneurship, productivity, innovation, and investment that produce
tangible benefits such as jobs, good wages, livelihoods, and a high standard of living in both
urban and rural areas through organized retailing.

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Overview of Aarong:

Aarong is a BRAC (Building Resources Across Communities) enterprise and a CSR-based

handicraft company founded in 1978. Aarong means "village fair." Today, Aarong's influence
extends beyond Manikganj to the rest of the country. Aarong is currently operating through 9
domestic outlets and one franchised outlet in London wear handloom terracotta retail chains
Bangladeshi patterns paid for. Aarong has over 488 products available in their stores. They have
grown into a thriving international enterprise showcasing ethnic to beautiful crafts made from
silks, cotton, Endi to, bamboo, jute, and other materials. Aarong has grown from a single shop to
one of Bangladesh's largest, with twelve outlets spread across the country's major metropolitan
areas, including Dhaka, Chittagong, Khulna, Sylhet and Comilla, Narayangonj, and one in
London, UK. Aarong embraces and nurtures a diverse representation of 65,000 artisans, 85
percent of whom are women. Aarong is also a musician. Aarong also serves as a defender and
promoter of traditional goods and designs. It contains a large design library where remnants of
our rich craft heritage, such as Nakshikatha art and Jamdani, have been extensively researched
and archived for current and future use. Aarong arose from the desire to ensure that the penniless
silk farmers of Manikganj received their goods upon delivery, allowing them to feed their
families. Aarong's employees are among the most disadvantaged people in the country. They
now have a way out of poverty and degradation thanks to Aarong, who provided them with none
previously. "Aarong" is a Bengali term for "organization." Village Fair is what it signifies. The
village fair provides a marketplace for traditional craftsmen of all skills to display and sell their
work. The organization's desire to promote our country's indigenous items, which are a part of
our rich cultural and creative legacy, is reflected in Aarong's naming. "AARONG" is an
abbreviation for the following phrases: A: Active: We'll be proactive in carrying out our ideas.
A: Appealing: We will appeal to ourselves and our workplace. R: Reliable: we will be
dependable in carrying out our responsibilities. We will perform well. O: Outstanding: w will
perform admirably. N: Novel: we will continue to seek out new and innovative methods to
improve all we do. G: Genuine: in our ideas and actions, we will be genuine.

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Case Study on Aarong

With the visionary goal to change the lives of deprived artisans and underprivileged rural women
by encouraging them and enlivening their arts and crafts. Aarong has employed and supported
many deprived women whom being suffered terrible loss during the liberation war of
Bangladesh “Aarong” has started its journey in 1978. The word “Aarong” means a village
fair/market.
In the beginning, their target buyers were a few merchandises of Dhaka. At present Aarong has
12 domestic outlets in Dhaka and a franchise outlet in London. The domestic outlets are in
Dhaka (Uttara, Dhanmondi, Gulshan, Moghbazar, Wari, Mirpur), 2 in Chittagong, 1 in Sylhet, 1
in Moulvibazar, 1 in Comilla, and 1 in Khulna. As a leading fashion house in Bangladesh
Aarong helped the poor silk farmers of Manikganj at the very beginning of their operation and
spread throughout the whole nation. From a single shop, they became the biggest retailer chain
of Bangladesh. The organization started to export in the international market since 1984 and as
they’ve achieved growth, their product line has grown up as well. Aarong exports their products
to Italy, Spain, Canada, Japan, and the U.K market. Aarong’s total revenue was counted US
$120million since 2018. Currently Aarong has more than 100 products in their production line.
Aarong has seen an average annual business growth of 40% in the past decade. While the was
many export oriented businesses were suffering economic recession in 2008, Aarong’s market
which is 95% domestic, in 2009 the organization has grown 12%. Aarongs key customers are i)
Middle and higher socio economic classes, ii) Foreign Visitors (such as tourists and business
travelers), lastly iii) Bangladeshis living abroad.

Aarong has created value for thousands of rural artisans and millions of satisfied customers
domestically and abroad. For their 13production centers and 648 sub centers, 65 thousand skilled
workers providing labor. 22000 employees are working in Aarong’s corporate level. 85% of
Aarong’s employees are woman. Aarong has employed and supported many deprived women
whom being tortured and suffered terrible loss during the liberation war of Bangladesh.

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Service Offerings of Aarong:

My Aarong Reward Card (MARC): My Aarong Reward Card (MARC) is a program that
rewards Aarong's frequent and loyal clients. The goal is to
strengthen existing and new consumer relationships by
increasing brand loyalty. Our MARC clients will be able
to earn and redeem points on their purchases through this
program. This loyalty program can also give you
information about your clients' buying habits so you can
recommend products that they are more likely to buy.

Registration Criteria: Unofficially, new MARC Subscription Forms may be available. As a

special thank you for their loyalty, outlets should provide Aarong regular but "MARC" clients
(customers who do not have MARC) the Subscription Form. If the consumer does not wish to fill
out the form himself, the sales associate should do so. Forms should be filled out with the goal of
gathering as much information about the consumer as possible without offending him or her. As
customers' cards are gathered, they should be requested to sign a registry book. MARC
Representatives should record/verify the customer's name, mobile number, and email address (if
available) when the consumer signs the book, and then sign the document to close the entry.

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Benefits
Permanent Benefits:

 Every purchase of any amount at any Aarong outlet earns you points. A life style
customer will earn 1 point. A gold customer will earn 2 points. A platinum customer will
earn 3 points.
 Points can be redeemed for cash at any Aarong location.
 It will be confirmed on the customer's account within the same day as the purchase.

Category Benefits:
 Platinum cardholders receive special treatment at any Aarong location.
 Platinum clients receive bonus points and birthday wishes.
 Festival gifts, such as new year gifts and Pohela Boishakh gifts.

Optional Benefit:

According to management discretion, Aarong will award double, triple, or more points to
cardholders in specific occasions or events.

Aarong's Loyal Customers of the Year is a yearly MARC customer recognition program. Aarong
will use the CRM to track down loyal customers. Selected MARC customers will be eligible for
Aarong's complementary advantages, such as a dinner at the Westin or Nandos, a travel package,
and many other possibilities, depending on management choice.

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AARONG’S Main Objective:
Aarong took some comprehensive approaches to develop each of their outlets within the country.
They have extended their operation from a program support merchandise to surplus generating
enterprise with financial and CSR missions. To do so, each of the enterprises complied four
fundamental objectives. Which are:
1) Aarong created job opportunities.
2) Since the Beginning of the organization, BRAC provides compensation to Aarong to keep
operations running without any obligation. Due to that, Aarong started generating surplus so that
they can minimize their donation dependency from BRAC.
3) Aarong’s development Intervention for the poor’s such as micro finance, primary education,
skill development etc. is a support and contribution towards BRAC’s sustainability.

Aarong Values:

Aarong has always been an innovator in the creation of opportunities and hope for the poor.
Aarong values creativity in designing global leadership in achieving marvelous development.
Aarong maintains transparency and values accountability in their professional work. Holding
honesty as one the most essential elements, Aarong deals with their finalcial sector and keeps the
section out of politics to keep maximum clarity among the organization. Aarong is committed to
engage, support and recognize the value of all members of the society regardless of their gender,
race, ethnicity, physical or mental ability and socioeconomic status.

Business Strategies:

To increase productivity of sets and labor Aarong values chain linkage to reduce risk for the
poor.BRAC; the parent organization also helps Aarong to become self-efficient. Aarong’s
handicrafts marketing brand started in 1978. Aarong’s develops their design focusing on the
divers types and texture of crafts and the patterns which are being passed by generations to
generations among artisans in craft hubs. Aarong mainly focuses on native Bangladeshi culture
where the people lives a simple lifestyle. Aarong plays an important role to protect and promote
the traditional Bangladeshi product.

(NOT DONE THIS PART)

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Aarong’s Basic Supply chain as a Manufacturer:

1. Planning: Aarong's supply chain management planning begins at the executive level. To
satisfy Aarong's sourcing, manufacturing, delivery, and return criteria, management attempts to
balance demand and supply.
2. Sourcing: Aarong has a vast pool of suppliers from which to draw. As the need grows,
Suppliers must provide raw ingredients and finished items. After that, it develops a product.
which we may take use of
3. Production: Cooperatives produce finished commodities and deliver them to customers.
Aarong's final processing phase..
4. Delivery: Aarong's delivery operation is overseen by its own fleet of vehicles.
Aarong sells its products directly to the public. It is their responsibility to disseminate.shipments
in an appropriate manner. In the delivery procedure, "just-in-time" is followed.

Aarong's return process entails product returns as well as post-delivery customer support. Aarong
often delivered their items to their customers within 30 days. Aarong's return process is also
included.

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Overview of Handicraft
Handicrafts express creativity, traditions, culture, heritage,
and lifestyle, among other things. As a result, it's occasionally
used as a symbol or sign to represent a country to the world
at large. According to studies, the handicraft sector is one of
the important production areas of Bangladesh, and most
people engage in it for a variety of reasons as a self-employed
or part-time career.

Handicrafts can be made from a variety of raw materials that

most people are unaware of. Resources include such as
fabrics, moldering and stiff materials, cardboard, plant fibers,
timber, grains, and so on, as well as lightweight materials such
as glass, rubber parts, plastic, beads, etc.

Aarong with Bangladeshi Handicraft Industry

The handcraft industry in Bangladesh is made up of tiny production operations, most of which are
situated in rural regions and are run either by the proprietor or with the help of a small team of 10-20
people. The majority of businesses adopt traditional methods, which may or may not include the use of
tools or simple equipment. The industry employs around 3 million people, with textiles, jute items,
timber, leather, cane, and bamboo accounting for over three-quarters of the total. The following are key
participants in the local supply chain as well as international buyers:

 Exporters of handicrafts by Non-Governmental Organizations (NGOs). (For example, Aarong)

 NGO-friendly production house (Non exporters)
 Private exporters/manufacturers. (For example, a variety of jute goods makers)
 Small, privately owned businesses (Local, e.g. Naksha, Rang, Nabarupa etc.)

Aarong began as a tiny handicraft merchant with the goal of providing sustainable livelihoods for under
privileged rural women while maintaining a constant emphasis on product quality and design. Big global
brands that formerly concentrated solely on quality and design are now focusing on integrating
developmental interventions for their supply chain workforce. For both social enterprises and corporate
firms to effectively provide sustainable lifestyles for millions of people throughout the world,
establishing shared value is the way forward.

Potters, brass workers, jewelers, jute workers, basket weavers, handloom and silk weavers, wood
carvers, leather artisans, and embroiders are just a few of the skilled individuals who contribute to the

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success of Aarong. Our craft supply chain includes craftsmen from all around Bangladesh. The Ayesha
Abed Foundation (AAF), with its network of 15 manufacturing facilities and over 700 hand embroidered
sub-centers distributed across Bangladesh, with the workforce of 30,000 skilled artisans. The remaining
35,000 artists manufacture for Aarong in individual workshops and traditional family-based artisan
groups.

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S.W.O.T Analysis on Aarong

Strength
Good brand image/ good awareness

This ethical brand began in 1978 as a humble means to empower rural artisans to rise above
poverty. Today, with 22 retail stores across Bangladesh and over 100 fashion and lifestyle
product lines, Aarong supports 65,000 artisans with fair terms of trade. The core competency of
Aarong is integrity, innovation, inclusiveness and effectiveness. As a most successful enterprise
model in Bangladesh Aarong creates competitive advantage among the handicraft-based retail
industry in Bangladesh. Aarong has been established as a strong brand today.

Strong financial foundation

From Post 70’s BRAC was looking for different types of works so that the women of Bangladesh
could be well off. The original founder was Ayesha Abed who took the initiative of creating
many items with the raw materials like cane bamboo and jute whereas some worked on clothes
of nakshi katha and embroider items. It is well backed up by BRAC as they have established
Aarong to pay the rural women for their goods on time. Over the past four decades, Aarong has
carved out a unique market segment for handicrafts, reviving Bangladesh’s rich heritage and
impacting the lives of more than 325,000 people through 650 small entrepreneurs and the
Ayesha Abed Foundation.

Traditional

Aarong’s tagline is “Aki britte banglar mukh”-

States Bengali always tries to keep focus on their traditional cultural heritage. If we look at the
products that Aarong is currently offering or have been producing for the past few decades it is
always focusing on the tradition of Bangladesh or Bangali culture. They are Revolutionising the
retail industry with high standards for quality and artistry. They blend the traditional with the
contemporary in ways that was never before done. For example Nakshi kantha has originated
since the late 90’s with the training of rural women to use several lungi dhoti and sarees and
stitching it to make a single kantha and then designs are made on top of it which refers to the
word naksha.

Weakness

• Dependence on BRAC (decision making)

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Aarong is dependent of BRAC. They have a centralised structure and needs approval of any
managerial decision from BRAC. By targeting profitable and scalable businesses, BRAC
enterprises are able to fullfill their social missions at a much greater scale while increasing
financial surplus that reduce the organisation’s donor dependency and support BRAC’s
development programmes and other innovations at a greater level. Here Aarong, was created as a
support mechanism to BRAC’s existing sericulture programme.
• Decentralized production

Aarong encourages people to work mostly on rural areas and reduce the level of poverty and
unemployment. However, this also helps Aarong to make use of the low labour cost. This is
where decentralized manufacturing comes in. It offers more flexibility. But this decentralised
production has some disadvantages as well. It increases production lead-time. Also some other
issues arise such as co-ordination difficulty, loss of control.

Opportunities

Automation

Aarong doesn’t rely much on technologies or automation because their focus is to encourage and
employ people and reduce poverty. As their mission is to “empower people and communities in
situations of poverty, illiteracy, disease and social injustice.” Aarong is well known for its work
of handicrafts and unique hand made designs. However, there are places that they could use
automation to reduce the production time of specific products without hampering the
employment. Automation enables a firm to be more flexible. It also facilitates computerized
monitoring of all the processes to prevent errors and maximize the efficiency.

Develop exports

Tradecraft was the first ever organization to have start the export business with Aarong in 86
which turned out to be a huge success and as a result in the last 20 years various organizations
from all around the globe started to do business with it. During 2007 5% of the total sales came
from this initiative.(Nipu, 2016). By maintaining its service and qualities over the years Aarong
was able to 4% revenue from exports of the 50million USD from exports. If they can exploit new
markets and keep this rate of exports ongoing then there’s a very high potential of generating
revenue from the foreign market.

Franchise ventures

Franchising is another way that Aarong can do to expand their operations in the foreign market.
They advantage that Aarong can get from this is immense. Aarong will be able to build a global
presence and also avoid the costs and risks of opening into a foreign market.

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Threats
New competitors (local and global)

Threat of new entrants will always be there for any organisation. In terms of Aarong local
competitors are there but not as big as Aarong. There are many small businesses who posses a
threat by offering same type of clothing and handicrafts in a much lesser price. As a result these
competitors are meeting or satisfying the end users goal and demand.

Market may become price sensitive

Aarong prices its product or service higher than its competition to create a perceived value.
Consumers wonder why a particular company is able to sell its product for more or why its
fellow consumers are willing to pay more for the product. In the end, it may believe that the
higher priced product or service is worth more. Aarong produce best quality product with unique
features comparatively high price than its strategic groups. However, this price might soon be a
threat if not taken corrective actions by analysing the market for new competitors.

Conclusion
Aarong has always been a fair-trade organization dedicated to improving the lives of
disadvantaged craftsmen and underprivileged rural women by revitalizing and promoting their
skills and craft. Aarong accepts and promotes a diversified representation of 65,000 craftsmen,
85 percent of whom are women, by reaching out to weavers, potters, brass workers, jewelers,
jute workers, basket weavers, wood carvers, leather workers, and more. Today, Aarong serves as
a platform for autonomous cooperative groups and family-based artists to market their work,
with the goal of elevating the country's handcraft industry to a global level of respect and
recognition

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