SUPPLY CHAIN AND DISTRIBUTION MANAGEMENT (MKT 757)

BM7703F

THE IMPACT OF SUPPLY CHAIN TOWARDS DISTRIBUTION OF

AGRO- BASED PRODUCT
Roselle

PREPARED BY:
SHAFIKAH BINTI TAJUDDIN (2012266186)
NOR AIN BINTI ROSLEE (2012454892)

PREPARED FOR:
DR MD NASARUDIN BIN HUSSIN

About FAMA Food Processing Center (PMMF)

FAMA food processing centers or (PMMF) is a producer for the products under the
Agromas brand. One of the potential PMMF in Malaysia is PMMF Rengit, Batu Pahat. PMMF
Rengit which is currently focused in producing various fruit based cordial such as Mango, Lime
and Roselle.
Each product is labeled under the Agromas brand and distributed by the distributors who
are registered under the FAMA. In PMMF, the Marketing units department will receive an orders
from customers, handle the procurement, select and monitor suppliers, stores the information of
suppliers, supervising and controlling the delivery of products.
The processing unit plays an important role as PMMF currently used about 80 percent of
the labor force as compared to the used of machines including labeling activities and the raw
materials processing. The skills and competence labors are need as each product produced
must meet the ISO 9001:2008 standard.

The Marketing Channel of FAMA Food Processing Center (PMMF)

Most of the transactions take place starting with the manufacturers to wholesalers,
wholesalers to retailers and retailers to consumers. This process may cause many transactions
and the markup charged also occurred for each transfer. Manufacturer might get fewer earnings
as compared to wholesalers, but the advantage is the products are always available in the
market.
Next, from manufacturers to retailers and directly to consumers, this process provides
many benefits to producers and consumers enjoy the lower prices. But today, many
transactions did not occur directly through the consumers because it is more compatible for
them by directly get the product at the retail stores.

About Roselle

Processing Method

SWOT Analysis

Issues and problems

Distribution Problems
o

Only registered dealers under FAMA agency are eligible to get the stock. As a
result, most of retailers faced difficulty to get the stock from distributors and the
stocks often takes a long time to enter the retail stores. Due to the over depend
on human capital, the process of ordering new stock takes too long to reach the
distributors. Customers who are difficult to get the stocks tend to switch to other
similar products but different brand.

Lack of Market Information

PMMF and other SMEs in Malaysia generally have less ability to gather
information and must rely on specific traders to obtain market information. As a
result, even though SMEs may have a comparative advantage in terms of raw
materials or labor force, they are unable to exploit these advantages by
proposing products that meet market needs. In many cases, SMEs may not be
able to secure new distribution channels to expand their businesses. Especially
for agro based products.

Lack of Funds

Many SMEs in developing countries like Malaysia face a chronic shortage of

funds. Furthermore, it is extremely difficult for SMEs to acquire funding from
private financial institutions because they generally lack collateral for loans and
the know-how to write business plans. Moreover, the loan amounts are small. As
a result, they are unable to obtain funding for medium and long-term investments
necessary for growth, and therefore are unable to compete in the market. In
addition to the lack of funding, another problem for SMEs is their limited access
to financial resources compared to larger companies. For PMMF, capital
constraints become the one of the major problems and challenges for the product
development.

Lack of Promotional
o

The promotion activities are too slow and make consumers not aware with the
Agromas brand whereas the quality of the product is quite good. It can be seen
that most of the SMEs brand often take a lower place in the shelf at the most of
retails store. It wouldnt help to create the brand awareness among the
customers toward the SMEs brands.

Too Much Depending On Labor Force

o

There are a limited number of machines and tools used for producing and
processing activities instead of too much depend on human capital. It will
interrupt the ordering process and difficult to meet the demand from customers.

Limited Numbers Of Suppliers

o

Since the numbers of Roselle farm in Malaysia, it makes impossible for PMMF to
switch to another supplier. Sometimes, the cordial process has to be stopped
while waiting for the new fresh Roselle arrive to the warehouse.

Strategy and Settlement

Distribution And Logistics

Inefficient distribution management causes the distribution cost of agricultural

products from producers to consumers to be uncontrollably increasing. This
matter, if it is not resolved results in stunted marketing activities and costs which
is not supposedly exist to be often born by consumers and does not benefit the
producers or consumers. Therefore SMEs should coordinate this so that the
parties involved in the marketing activities should create an efficient distribution
system, less post-harvest damage and management of quick damaged products
systematically. Planning and coordination of distribution activities based on the
target of supply and demand needs to be created. A more liberal business
system needs to be identified to address the distribution works of selected
agricultural products in order to avoid losses to the parties involved in the
marketing activities.

Provision To Upgrade The Machines And Tools

The federal Government through the Ministry of Agriculture should allocated the
provision to upgrade the machines and tools for PMMF it help SME increasing
the Agromas product market as well as to meet international standards for food
production. This is a constant effort by the government to help SME to go global.
Thus the monitoring of the quality has to be upgraded and later improve the
operating costs.

Promotion

Strategies and promotional programs within and outside the country are very
important for an agriculture product to go into the market. Malaysia especially just

gives greater emphasis to market its agricultural products aggressively. Without

regular promotional efforts and continuous impact is not significant and the
product will require a longer time to be accepted in the market. Ministry of
Agriculture and Agro-based Industry should ensure that agricultural products
produced by our country are being promoted effectively and constantly with the
use of mass media such as newspapers, magazines, pamphlet, news letter and
electronic mass media like radio, TV, movies and satellite. Multimedia promotion
is increasingly popular during this time such as the Internet, SMS and the
website should be used to ensure the country's agricultural output can reach to
all levels of users. Scale publishing such as newspaper inserts, special issue,
interviews, press conferences, news and articles should be done from time to
time. In addition, advertisements such as billboards, stickers, complimentary
gifts, culinary promotions, fairs and festivals and participation of fairs and
exhibition should be intensified so that agricultural products will be renowned,
sought after, desired and purchased without weary.