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Supply Chain Management Final Report On
Submitted to: Sir Aamir Malik Submitted By:
Nadir Ali (Roll No MBED-10-17), Rao Ateeq(Roll No MBED-10-08), M.Akhtar (Roll No MBED-10-33)
Shahbaz Akhtar (Roll No MBED-10-44)
Department of Business Administration
Sub Campus Dera Ghazi Khan
Supply chain Report on ENGRO FOODS LTD.
We would like to offer our humble gratitude to
the most Gracious and the most Merciful, who gave us strength and enabled us to achieve our goals. The main purpose of the project is to know about the Practical implementation of all the concepts we studied in the Supply Chain Management course. All the material that has been included in this report is based on data/information gathered from various sources and is based on certain assumptions. Although, due care and caution has been taken to compile this report but the contained information may vary due to any change in any of the concerned factors, and the actual results may differ substantially from the presented information. We are heartily thankful to our SCM knowledge Bank teacher; Mr. Aamir Abbas Malik whose constant guidance and support enabled us to develop an understanding of the subject which ultimately helped us in making of this project. At Engro Foods Limited, we would like to mention the names of
1. Mr. Salman Goheer. (Head of Supply Chain) 2. Mr. Ammar Mursalin
Who gave us their precious time & gave us all the required information about Engro Foods Supply Chain Management.
Supply chain Report on ENGRO FOODS LTD.
To critically examine, understand & analyze the practical implications of supply chain management course.
Analytical examination conducted through interview with EFL head of supply chain & detailed study of internet articles on Olpers, Product of Engro Foods LTD.
Engro Foods LTD continues to experience strong growth due to many reasons in which above all is its Brand Equity. Olpers, EFL’S Flagship Brand is at its growth stage & it made its place in the current competitive market due to many factors one of which is EFL’S effective supply chain management.
Given the highly competitive nature of the Dairy Products market, need of having smooth & flawless supply chain have traditionally been on the high side & Engro Foods LTD are on the right track.
Supply chain Report on ENGRO FOODS LTD.
My sought to choose this organization.
Engro food is one of the most popular and developing industry of Pakistan. Engro foods making progress due to effective management system.so that’s why it is rapidly growing against their competitors.
Engro stands for “energy for growth. From inception, Engro is a legacy of continuous growth,
new challenges and fulfilled promises. From fertilizers to dairy products, business solutions to PVC resin, power generation to commodity trade, at Engro their ambition is to become the premier Pakistani enterprise with a global reach.
Supply chain Report on ENGRO FOODS LTD.
Engro Corporation is one of the leading Pakistani business conglomerates with stakes in the
fertilizer, food, power generation, petrochemicals, automation and terminal storage industries. Having had undergone an employee led buy out in 1992 it has expanded phenomenal in the past two decades. As a holding company its subsidiaries include:
Engro Fertilizers Limited Engro Foods Limited Avanceon Limited Engro PowerGen Limited Engro Polymers and Chemicals Limited Engro Vopak Limited
ENGRO FOODS LTD:
Founded in March 2006, Engro Foods Limited is a producer and marketer of dairy products. The company’s brands include Olpers Milk, Omore ice cream, and Tarang, Olwell, and Olpers cream. To support these brands and their highest standards of quality, Engro Foods has invested heavily in milk processing and milk collection infrastructure. Headquartered in Karachi, Pakistan, it has offices in seven cities across the country, as well as processing plants at Sukkur and Sahiwal. Engro Foods is a subsidiary of Engro Corporation Limited, one of Pakistan’s most
1 billion which provides direct employment to 750 people.36 in total subsidiaries value of 63. namely "Tarang". In the five years since its launch.Supply chain Report on ENGRO FOODS LTD. LOCATION OF PLANT: The dairy processing plant is situated at Rohri & Sahiwaal & now in Punjab aswell The office of Engro foods is situated in Sukkur. respected enterprises with more than 40 years of business in the fertilizer and chemicals industry. ENGRO FOODS HISTORY: The plant of Engro Food Limited is located at Sukkur on 23 acre land. and recently introduced a milk whitener. the company also sells the company also sells related products such as creams and unbranded products such as ghee. Engro Foods has entered the Food business through milk processing and sale with the company’s vision to pursue growth opportunities based on country fundamentals and own strength. import of 1000 cows and an ice cream plant. The company's milk production capacity is 700k litters per day. has the raw milk reception capability of 300. It also positions the company to leverage its corporate social responsibility initiatives and work closely with rural communities to promote integrated farming and livestock development. The company is all set for growth as the milk business profitability is increasing due to increasing consumption of milk and increasing prices of dairy products. Engro Foods has seen a rapid growth in sales and market share. This effort is expected to play a pivotal role in poverty alleviation and improving livelihoods of the poor in the milk collection areas.4 billion in Engro Foods has been approved by the board for: expanding UHT capacity to 900k liter per day. Moreover an investment plan of $ 3.000 liters per day and UHT milk capacity of 200.4. ENGRO FOODS LIMITED is the 100% owned subsidiary of ENGRO. expanding milk powder capacity to 70 kilo per day.000 liters per day. The plant has been established at a cost of Rs. Besides selling milk. 6 . The value of the ENGRO FOODS LIMITED is Rs.
especially in the smaller farms. The plant provides a processing outlet for the local farmers who rear dairy herds of cows and.Faisal Lahore Multan Rawalpindi Peshawar Gujranwala They believe that there recent successes will take them to there goal which is “To be one of the biggest players in the food business by dominating the food business. LOCATION OF OFFICES: The head office of Engro Foods is located near Sea View . It is one of the biggest plants of its kind in Pakistan and the first ever in the Sahiwal region. ENGRO’S NEW PROCESSING PLANT: GEA TDS has recently completed a Euro 3 million milk processing plant for Engro Foods in Pakistan.Supply chain Report on ENGRO FOODS LTD. 7 . karachi. There regional head offices are in : Karachi located in Business Avenue Shahrah – e . The commissioning of the plant was completed in just 2 months and operation started by end December 2007. and to achieve this they will settle for nothing less than the cream. and 10 million servings of Tarang (tea whitener). that’s 1 million servings. The plant supplies the region around Sahiwal with 250.000 liters of low fat milk a day. buffalo.
PLCs are located in cooled cabinets installed on the base-frame unit of each module. The Engro plant also contributes to the local economy by employing some 200 people throughout the factory. Although Engro has only been in the food and dairy sector since 2006 the company has already carved out a significant market share and is growing quickly. powder mixing. Acid and caustic concentrates are stored on site in two tanks each with a capacity of 15m3. The GEA TDS project was to supply equipment and engineering services throughout the process.000 lit/hr.Supply chain Report on ENGRO FOODS LTD. and degassing. This included milk reception. In such a short time it’s already well on the way to achieving its goal to be one of the biggest players in Pakistan’s food industry 8 . milk processing. The process can pasteurize milk to 85˚C at the rate of 25. butter oil dosing. process and filling machines. automation for both the process and CIP equipment. UHT processing. can handle up to 21. detailed engineering and project management. SNF and butter oil. Pasteurized milk is stored in 5 tanks each holding up to 75m3. UHT equipment. with indirect heating and cooling via heat exchangers. All were delivered wired and I/O tested. standardization for milk. Cream is pasteurized separately at a temperature of 95˚C at a rate of up to 3. Clean in Place (CIP) equipment such as trucks. The CIP system covers the whole process from the delivery trucks through to the filling machines.000 lit/hr and includes milk clarification and skimming. a refurbished homogenizer. cream.500 lit/hr. and commissioning. The whole process is controlled using PLCs supplied by Allen Bradley. Raw milk reception handles up to 40. cream handling and processing.000 lit/hr of both cow (20%) and buffalo (80%) milk from the surrounding region’s farmers cooling it from approximately 15˚C to 4˚C for storage in the two 125m3 storage tanks.
Board of Directors Asad Umar Afnan Ahsan Ruhail Mohammed Isar Ahmed Shahzada Dawood Mujahid Hamid Muhammed Amin Ms.Supply chain Report on ENGRO FOODS LTD. Spenta Kandawalla Abdul Samad Khan Chairman Chief Executive Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director 9 .
C Manager Purchase Quality Assurance Officer Logistics Officer 10 . ENGRO’S Departmental CHART: Departments Administration Finance & Account Marketing Milk Procurement Human Resource Quality Assurance Supply Chain Manager Plant Manager procurement Manager Q.Supply chain Report on ENGRO FOODS LTD.
7% of the total agriculture sector. according to latest statistics Pakistan is the 4th largest milk producing country in the world. Qualified food technologists at this department ensure that highest quality parameters are adhered to through all steps of production and that the products reach the consumers as per promise.6 billion liters in Pakistan is shared between a 71. It has a livestock and agriculture sector contributing over 10% to the GDP. consisting of food technologists working at the collection centers and veterinary doctors providing service to the farmers. Milk Procurement Department As all of our food products are milk based. Undeniably. The annual milk production of 33.Supply chain Report on ENGRO FOODS LTD. and a milk economy that in value terms is 27. For the other 97%. a sector with such credentials can bring about not just a radical change but also a dairy revolution in the country. the entire Milk Procurement department plays a critical role in defining the quality of the end product that reaches our customers. It is an untapped market. the (UHT) market is growing at a steady rate of 20% a year. expected to grow an additional 3 billion liters in the next few years at a growth rate faster than most sectors. Pakistan’s Milk Industry Overview With an estimated 33 Billions Liters of annual milk production from 50 million animals managed by approximately 8 million farming households. Ensuring regular collection of fresh and pure milk right from the farmer to the factory and ascertaining the freshness of milk all across the milk procurement process.1% share for the rural economy and A much smaller urban share of 29%. is the responsibility of Milk Procurement department. a multi-layered distribution system of middlemen has evolved to supply milk. Quality Assurance DPTT Quality Assurance is strictly followed in Engro Foods. Despite only a small percentage (3%) of milk being processed. 11 . Only 3% of the total production of milk is processed and marketed through formal channels.
and 108 Kg in Baluchistan. Therefore. Current Milk Quantities Available in Pakistan: 12 . demand for open. Hence. The supply of milk to meet domestic demand has usually lagged. 132 Kg in Punjab. per capita consumption stands at 246 Kg in Sindh. powdered milk is imported every year. all milk (both milk and milk equivalents) is second only to cereals in level of per capita consumption in Pakistan. “Over all consumption of milk per day is 400.Supply chain Report on ENGRO FOODS LTD. Province wise. raw milk is the primary dairy product marketed in the country. To meet this gap. Due to rising inflation and high poverty levels. the majority of Pakistani consumers are price conscious. The annual per capita consumption level at the national level is 190 liters.000 liters in Karachi only” Supply and Demand: As a food item. 86 Kg in NWFP. raw milk is high compared to processed milk.
13 .450 850 1.909 496 SOURCE: PAKISTAN DAIRY INDUSTRY. WHITE REVOLUTION PAPER.195 627 Buffalo 407 400 1. Livestock Population: MILK PRODUCTION PER ANIMAL KG/LACTATION: Country Bangladesh Bhutan India Nepal Pakistan Sri Lanka Cattle 207 257 987 415 1.Supply chain Report on ENGRO FOODS LTD.
PAKISTAN’S MILK SUPPLY CHAIN: 14 .Supply chain Report on ENGRO FOODS LTD.
One seventy million is a very big market. our people spend a lot on food. Our manner of achieving this success is to include value for money Core Values: 1. Thus. 5. and continue to contribute to the growth of industrialization in Pakistan by being the market leader". Besides. There are only a few countries with such a huge population in the world.” Engro Foods CEO Sarfaraz A. The Company aims to generate a significant portion of its revenue from foreign operations. Leadership Innovation Diversity and International focus Quality and continuous Improvement Candid and open communications Individual growth and development Enthusiastic pursuit of profit 15 . Why did Engro enter the food business? “Big opportunity due to population growth and indigenous sourcing. There is a huge population. 2. Rehman EFL Aim: “Dominate the food business and to achieve this we will settle for nothing less than the cream” EFL Vision: “To become fast growing mega Food Company & also to elevate Consumer Delight Worldwide”. Our economy is agro-based. growth in diversity. 6. our primary value is fulfillment of our customer's needs. 7. Mission of EFL: Our mission is to provide satisfaction at a competitive cost. 4. 3. We get raw material at the local level. We believe our success depends on our customers.Supply chain Report on ENGRO FOODS LTD.
8. Safety. Ethics and integrity 9. our customers and visitors in ensured. health and environmental responsibilities extend beyond protection and enhancement of our own facilities.Safety Health & Environment: We will manage and utilize resources and operations in such a way that the safety and health of our people. We believe our safety. Health and Environment 10.Supply chain Report on ENGRO FOODS LTD. 1. our neighbors. use and after-use disposal of our products. Team Work & Partnership. and we are concerned about the distribution. 16 .
Quality and Continuous Improvement: We believe that quality and relentless commitment to continuous improvement are essential to our ongoing success. professional and people skills to inspire a group or organization to set high goals and achieve them willingly. We believe that leadership skills need to be strengthened at all levels within our organizations and that managerial and professionalism is a necessary foundation. and providing products and services that meet expectations 100% of the time.Candid & Open Communication: We value communication that are courteous.Enthusiastic Pursuit of Profit: Successfully discharging our responsibilities to our shareholders to enhance the long-term profitability and growth of our company provides the best basis of our career security and meaningful personal growth. 2. 4.Leadership: We have leaders of high integrity. energy and enthusiasm who have the necessary managerial. 6. To this end. Choosing the course of highest integrity is our intent and we will establish and maintain the highest professional and personal standards.Supply chain Report on ENGRO FOODS LTD. A well-founded reputation for scrupulous dealing is itself a priceless asset. We can best accomplish this by consistently meeting the expectations of our customers and providing them with value. we define quality as understanding the customer’s expectations. 3. agreeing on performance and value. “Quality in all we do”. Our motto is. 17 . 5.Ethics and Integrity: We do care how results are achieved and will demonstrate honest and ethical behavior in all our activities. candid and open and that enable each of us to do our jobs more effectively by providing information that contributes to the quality of the judgment and decision making.
personality and style because diverse solutions. approaches and structures are more likely to meet the needs of the customers and achieve our business goals. segmentation. approach and skill afforded by teams is strength we must continuous building into our organization.Individual Growth & Development: We strongly believe in the dignity and value of people. The major competitors in case of offering the UHT milk are: 18 . 10. time to launch a new product. We encourage challenges to the status and seek organizational environment in which ideas are generated. advertising.Diversity & International Focus: We value differences in gender. 8. nationality.Teamwork & Partnership: We believe that high performing teams containing appropriate diversity can achieve what individuals alone cannot. race. MAJOR COMPETITORS: Engro Foods Limited is fully aware of its competitors.Innovation: Success requires us to continually strive to produce break through ideas that result in improved solutions and services to customers. target market.Supply chain Report on ENGRO FOODS LTD. 9. The company had to consider the areas including (product design. Consciously using the diversity of style. We must consistently treat each other with respect and strive to create an organizational environment. CORE COMPETENCY OF EFL: Aggressive style of business: launching more products in short time. 7. time for necessary changes & constant over view). culture.
4. 3. 2. Nestle HFL Millac Halla Prime Nurpur Nirala Dairy Crest Other than the brand mentioned above Olper’s also faces an indirect competition from the local milkman the GAWALA. OLPERS CREAM TARANG OMORE OLFRUTE Olwell Hi-Cal Lo-Fat (HCFL) Milk OLPERS OWNSUM 19 . 7. OLPERS MILK. EFL Brands: 1. 5.Supply chain Report on ENGRO FOODS LTD. 6.
20 .Supply chain Report on ENGRO FOODS LTD.
6-layered Tetra Pak Brick Aseptic red packaging and comes with approx 71days shelf life. STOCK KEEPING UNITS: The company is maintaining three SKU’s (stock keeping units) for Olpers in tetra packs that are · 1000ml · 500ml · 250ml 21 . It is available in easy-to-open. 2006. Olpers milk is EFL’s standardized and homogenized pure UHT (Ultra heat treated) milk with 3. Launched on March 20. but recently the company changed the USP to “Jo dil khol kay jeetay hain unheen kay liyay hai Olpers” Both the tag lines have a very positive impact on Olpers image because of their drect emotional positioning & relation with its customers.9 % solid non-fats.5 % fat and 8.Supply chain Report on ENGRO FOODS LTD. It is collected from 3000 plus villages & 10000 plus farmers It is EFL’s premier brand. and the choice of quality-conscious consumers who only go for the best. OLPERS MILK: The flagship brand of Engro Foods is OLPER’s Milk. TAG LINE: The unique selling proposition for Olper’s is: Subah Bakhair Zindagi.
4 % is business waste Engro FOODS INVENTORY TURNOVER: On every 26th day of month inventory at EFL gets replenish. 22 . 2006. it comes with a 3 months shelf life. Olwell is a low-fat.Supply chain Report on ENGRO FOODS LTD. which prevents osteoporosis Packed in 6-layered Tetra Pak Brick Aseptic red packaging with easy-to-open plastic cap. also great for eating with bread etc. STOCK KEEPING UNITS: 1 Litre (1000 ml ) : 12 packs per carton ½ Litre (500 ml) : 12 packs per shrink-wrapped tray TOTAL SUPPLY CHAIN C OST OF Olpers: Product Cost: 75% Others: 25% Out of 25 %. STOCK KEEPING UNITS: ¼ Litre (250 ml) : 27 packs per shrink-wrapped tray Olwell Hi-Cal Lo-Fat (HCFL) Milk : Launched on December 15. Olper’s Cream is luxuriously rich in its thickness & nutritional value. delicious desserts and creamiest coffee with its unique taste. It is also high in calcium content. ORDER FULFILLMENT RATE: At EFL its 86-87 % for olpers. Olper’s Cream : The premium cream processed hygienically from pure fresh milk. and comes in 6-layered Tetra Pak Brick aseptic purple color packaging with 6 months shelf life. 2006. high-calcium milk with the richness of pure milk. It promises the richest & scrumptious assortment of tempting toppings. It is an ideal choice for weight-watchers and heart patients. It was launched on September.
Eid Ramazan and Moharram VARIATIONS IN SUPPLY OF MILK: In Pakistan there are mostly three season of milk which are as under: Flush Season: (1st Jan to 15th April): During this season there is maximum production of milk in the country.Supply chain Report on ENGRO FOODS LTD. OLPER’S MILK DEMAND VARIATIONS: The demand of olpers milk usually increases in the festivity season or any event such as. Time to time forecasting is done in short intervals to meet the level of demand. Engro Foods LTD. 23 . OLPERS LIFECYCLE Source: Mr Salman Goheer. LEAD TIME OF OLPERS: Lead time with regards to: Procurement of milk varies in between 5days & 4 months Order placement to order fulfillment : 12-18 hrs SAFETY STOCK For olpers hardly 6-7 days safety stock is kept because of its low shelf life. Head of Supply Chain Dep’t.
TETRA PAKS MILK MARKET SHARE SUPPLY CHAIN MANAGEMENT AT ENGRO FOODS The above chart depicts the overall supply chain management process at Engro Foods (Pvt) Ltd. Semi-flush season (1st Aug to 31st Dec): In this season about 70-80 % milk production in the country. less green fodder availability and natural reproduction cycle of animals.Supply chain Report on ENGRO FOODS LTD. Outbound Logistics: the warehousing and distribution of finished goods.. These activities can be divided into three all encompassing categories as well: Inbound Logistics: the receiving and warehousing of raw materials. Operations: the processes of transforming inputs into finished products and services. and their distribution to manufacturing as they are required. Lean Season (16th April to 30th July): Minimum production of milk in the country due to high environmental temperature. 24 .
Mr. As this report shall unravel most of the details regarding this claim. Thus cost reduction is definitely on top of the priority list for Engro but fulfilling customer’s demands is just as important. some established other newer entrants is a combination of low cost and rapid and flexible response. Technology development: technologies to support value-creating activities. hiring. control systems. OBJECTIVE OF SUPPLY CHAIN MANAGEMENT AT ENGRO FOODS As per the Supply Chain Development manager at Engro Foods Mr. training. An example of response would be the use of third party logistics to ensure that These primary activities at Engro are supported by: The infrastructure of Engro: organizational structure. the basic approach towards a competitive advantage over the competitors. farms and farmers so as to reduce the transportation cost and cost of milk deterioration and subsequent losses. and compensation. the primary objective of supply chain management at Engro Foods is “ Fulfilling our customer’s demands in the optimum way” And as he himself pointed this out. it can be stated that optimization is the key word.Supply chain Report on ENGRO FOODS LTD. etc. Human resource management: employee recruiting. thereby resulting in a profit margin. SUPPLY CHAIN STRATEGY AT ENGRO FOODS The supply chain strategy is obviously in line with the objective for supply chain management which in turn is in line with the overall mission and values of the organization. right now it would suffice to state that an example of low cost strategy would be the location of the plants near the abundant sources of supply. Nagi said that it is “A give-away between “the service factor” and low cost” So if we link it to the theoretical concepts that have been taught to us in this Operations Management course. Umair Nagi. 25 . company culture. Thus the goal of these activities is to offer the customer a level of value that exceeds the cost of the activities. So when narrowing down to the strategy. development. all of which have been stated above.
9% which is also adjusted during the process depending on the quality of milk. OTHER INGREDIENTS There are several other ingredients that are added at the various stages of the production process at Engro Foods and their respective quantities depend on the recipes of the products being manufactured. Furthermore. The raw milk which is mainly the buffalo milk is obtained from the various dairy farms across the country with most of these dairy farms being located in Sindh and Punjab region. that it is the elementary level activity and if there are flaws in it.Supply chain Report on ENGRO FOODS LTD. SNF in milk is to be maintained at 8. during the production process. the effectiveness emphasis on the quality of the raw materials obtained and at the same time establishing and maintaining long term relationship with their suppliers. This way Engro Foods is playing an important role to produce and market a range of high quality dairy in a country where a huge quantity of this commodity is wasted each year due to an inefficient farm-to-market infrastructure. RAW MATERIAL PROCUREMENT Raw material procurement plays the most integral part in the success of any supply chain. 26 . more fat is added to the milk to produce Tarang. These include SNF that are solids not fats and fats which are adjusted to achieve the desired levels. The reason being. the Olpers milk consists of 3. therefore. Tarang milk which is the tea whitener and more creamy in nature has 7% fat. Olwell milk which is high calcium and low fat milk targeting the health conscious segment. For instance. Another product of Engro Foods. RAW MATERIAL: The various kinds of raw materials required for the milk and cream production at Engro foods include: Raw Milk Other ingredients like SNF and fats Packaging material RAW MILK The raw milk which is further processed in the manufacturing plants at Sahiwal and Sukkur is the core raw material at Engro Foods because their product portfolio encompasses all dairy based products.5% fat whereas. requires high calcium level that is modified during the process.
Supply chain Report on ENGRO FOODS LTD. with a 3 months shelf life. It is in the form of rolled sheets of aseptic packaging arriving at the manufacturing plant directly from the supplier. However. The reason accounting for this is that it is easier to identify adulteration in low volumes of milk as opposed to high volume provided by the other method. PACKAGING MATERIAL The packaging material used by Engro Foods is supplied from Tetra Pak Ltd. resulting in a 6-layered Tetra Pak Brick Aseptic packaging. Today. Sources of milk supply At Engro Foods the supply of raw milk. the overall quantity of milk collected through this method is very limited. It started off with hundred Milk Collection Centres in March 2006 and now in 2008 has over five hundred and fifty Milk Collection Centres operating across the country. The method of milk collection from direct sources is the most preferred one by Engro Foods mainly because of the low probability of adulteration of the milk by dairy farmers. The aseptic packages are sterilised prior to filling of UHT (Ultra Heat Treated) milk. productivity and efficiency to meet the selfimposed commitment to quality. The volume of milk supplied by the dairy farmers varies immensely depending on both the size of the are covered by the dairy farmer and the availability of milk and at times could be as low as two litres a day. that is the way milk collection is done can be divided into: Direct Sources Contactor based collection Direct Sources: The method of milk collection through direct sources can be defined as milk collection done through various dairy farmers residing in different villages. The vast network comprises of village milk centres which are equipped with chillers to preserve the quality prior to long hauls to the factories served by specially designed tankers. A villager called “Dhoti” is responsible for collecting milk from his respective area and delivers milk every morning and evening to the Milk Collection Centre. Engro Foods can be regarded as having one of the largest milk collection networks in the country which is unmatched in size. 27 . Milk Collection Centre: Engro Foods maintains a full fledged Milk Collection Department to manage milk collection through direct sources.
000 litres. These chiller containers are aseptically cleaned before milk is stored in them. The contractors are responsible for milk collection from a large area and can bring about ten thousand litres of milk a day from dairy farmers. The reflecting surface of the trucks also provides protection against infrared rays and reduces the degree of heat on the tank. the company fears adulteration on part of contractors because it is harder to investigate when the volume is high. it has enabled Engro Foods to collect better quality milk in the quantities it needs. The transportation fleet at Engro Foods is partly owned and partly contracted that is they make use of third party logistics.Supply chain Report on ENGRO FOODS LTD. This method of contractor based collection contributes the most to the overall quantity of milk collection. However. Transportation of raw milk: The raw milk is transported from the milk collection centre to the manufacturing plants via insulated tankers. the transportation routes from milk collection centres to the manufacturing sites at Sahiwal and Sukkur are designed in a way to avoid overlapping of routes which otherwise would add up to the increased cost of transportation.000 and 35. 28 . The insulated tankers maintain the temperature of milk around four degrees Celsius. it has proved a regular source of income for farmers through an assured and growing income resulting from the sale of their milk. Moreover. The raw milk is normally transported between four to six hours to avoid loss of quality. At the Milk Collection Centre a trained milk collection agent who tests and records every supply for quality and fat content collects the milk and rejects the milk that does not conform to their quality standards or is adulterated. The reason why the tankers are insulated is to prevent the milk from getting hot in the summer or freeze in the winter. lactose and butterfat content it is sent to the chiller containers which protect milk from air. On one hand. This milk is then transported to the plant. and on the other. The main objective of Milk Collection Centre is to deal with small quantities of milk provided by the village dairy farmers. Normally the capacity of the regular tankers used for the transportation of milk from the milk collection centre to the plant varies between 10. light and heat. Also the cool temperature stops the production of bacteria while the milk is transported over long hauls to the manufacturing site. Contractor Based Collection: The contractor based milk collection involves collecting milk from approved suppliers who are aware of the quality standards adopted by the firm. Once this milk is tested for the protein.
Supply chain Report on ENGRO FOODS LTD. EFL SUPPLY CHAIN STRUCTURE Supply Chain Department Supply Chain Development Customer Service Department Planning Purchasing Warehousing Logistics Inbound Logistics: Milk Procurement Outbound Logistics Dispatches 29 .
EFL SUPPLY CHAIN MANAGEMENT GIMMICKS: SIX SIGMA AT ENGRO : Engro is among the first Pakistani companies implementing six sigma across all areas and utilizing it as a management system to execute our strategic objectives. It has led to 30 . Six sigma was launched in February 2006. employee development is the most critical and six sigma will be leveraged to help bring out the best in our people. Engro has been interacting with the farmers for fertilizers and has gained quite a good reputation over the years. Among the focus areas. Employees drive improvements in other areas: speed. Ali Akbar. Six sigma’s robust problem-solving methodology and statistical tool allows the company to benchmark processes against global standards in a language that is comparable across any industry or function.Supply chain Report on ENGRO FOODS LTD. innovation. “In order to succeed. Director Marketing EFL. HR Assistant Manger. Hassan. EFL. It helps ensure that we sustain our promise of delivering high quality products and services to our customers – on time. you should ALWAYS capitalize on your STRENGHTS and NEVER on your COMPETITOR’S WEAKNESS!” ENGRO’s Strength was their fellowship with farmers for a long time. every time. Communication is critical and Engro conducted six sigma launch events country wide as well as two internal conferences and electronic and print updates throughout the year management and non management employees were trained extensively during 2006 & 2007 on six sigma principles. Source: Mr. PR WITH FARMERS : According to Mr. perfection and becoming world class.
THIRD-GENERATION PLANT: EFL only. ensuring that milk of the correct quality is produced and that sufficient raw milk is always available to satisfy company’s needs. Ensuring that the producers are paid promptly and accurately. projects. 5. Purchasing raw milk from producers and transporting it to factories effectively and efficiently.Supply chain Report on ENGRO FOODS LTD. 4. 2. This is an added advantage and strength for the company because it will never be short of milk production. 5. Procurement of milk is not an easy job. area executives or milk collection controller. 4. The farmers also won’t have to look elsewhere to sell their milk. Quantity Quality Cost Competition Man Power Milk procurement department of EFL provides a value-added service to all their milk producers. drivers. Installation of bulk coolers in the area. through the use of strategies. a strong bond and long term relationship with the farmers who are willing to supply milk to the company. This is the department with highest number of employees. Milk yield improved. EFL plant is the only plant in Pakistan that uses Bactofuge technology to virtually eliminate bacteria and ensure premium quality and hygiene. systems and policy. processes. Procurement teams of EFL manage a number of Milk Procurement responsibilities including: 1. peons and etc. 2. milk collection supervisors. has the third-generation UHT milk plant in the country. 3. EFFICIENT MILK PROCUREMENT DEPARTMENT: EFL MPD is provided with highly paid Procurement managers supported with a team of qualified and experienced staff of zonal managers. Successful clean milk route development in various new identified areas. In order to support the procurement staff a separate wing of accounts is also established. It stands on the following five pillars: 1. 3. 31 . mobile testers.
Second System: Quality assurance department support the procurement department for procurement of good quality of raw milk. This system ensures better employees accountability. QUALITY CONTROL SYSYTEM: Following types of quality assurance system exist in EFL to assure the procurement of the best quality raw milk. at the same time providing the employees with chances to make use of their competencies. we define quality as understanding the customer’s expectations. 9. Source: Shahid Hafeez Khan. Hassan. Advanced training to drivers in the handling of mass milk in case of emergencies. Said by Mr. HR Assistant Manger. EFL. Head Of Supply Chain.Supply chain Report on ENGRO FOODS LTD. BUSINESS QUALITY MANAGEMENT SYSTEM & KAIZEN PRINCIPLE: Mr. First System: Procurement department is responsible for the procurement of good quality raw milk. EFL: “We imply our strategies at large scale as well as at small scale on continuous basis according to the type of business & its requirements. The 360 Degree mechanism became fully operational for senior management in 2006”. 7. Our motto is. Hygiene practices improvement at all levels of milk production and procurement Reduction of Bacterial Count of milk. Trainings to field staff for handling of sample and client. Here is the practical application of it at EFL. Salman Goheer. Business quality management & total quality management goes side by side. 2. “Quality in all we do”. 1. So at EFL. Quality Control Manager-Field. To this end. We believe that quality and relentless commitment to continuous improvement are essential to our ongoing success. 8. Engro Foods Limited. agreeing on performance and value. 6. 32 . and providing products and services that meet expectations 100% of the time. 360 DEGREE FEEDBACKS: “Our commitment to continuous improvement in the performance management systems for employees at all levels was reflected in adoption of the 360 Degree Feedback System.
Supply chain Report on ENGRO FOODS LTD. Words of Mr Salman Goheer. Engro Foods LTD. Regularly modifying and updating the Company's accounting software is also the MIS team's responsibility. PUSH-PULL POINT: “Every supply chain is almost always a combination of both push and pull. MIS: The MIS department at Engro Foods ensures that all automation is running error-free at all times. Head Of Supply Chain. Said by Mr. Salman Goheer. EFL. Engro is mostly having long term plans and for achieving these long term plans it gains support of short term plans”. PLANNING: “Engro do planning on short term and long term basis simultaneously. Upstream is push based while downstream relies on pull based systems”. where the interface between the push-based stages and the pull-based stages is sometimes known as the push–pull boundary & so is ours. Head of supply chain. OLPER’S SUPPLY CHAIN 33 .
34 .Supply chain Report on ENGRO FOODS LTD.
Other advantages of homogenization include a richer flavor and possibly increased digestibility. while toning refers to adjustment of SNF contents of milk by reconstitution of milk powder in it. Milk can be made commercially sterile by Ultra high temperature (UHT) where milk is heated to 136 to 140 ºC for 3-4 seconds. of the fat globules. STANDARDIZATION AND TONING Standardization of milk involves the adjustment of the fat content of milk. The heat treatment and packaging allow this milk to be stored at room temperature for extended periods of time. to obtain a given fat contents. ULTRA HIGH TEMPERATURE (UHT) AND ASEPTIC FILLING The term sterilization refers to the complete elimination of all microorganisms. 2. form these tanks milk after chilling to 4-5 ºC is transported to dairy plant in isolated tanks for further processing. from a practical view. Ultra high temperature processing may cause some loss of foliate. In EFL both these processes are used simultaneously 3. The food industry uses the more realistic term "commercial sterilization". or a milk product. vitamin B12. The net result. PASTEURIZATION: Pasteurization can be defined as "The heating of every particle of milk or milk product to a specific temperature for a specified period of time without allowing recontamination of that milk or milk product during the heat treatment process. The further processing might include Ultra High temperature (UHT) and aseptic filling or drying to make dried milk. This milk is then packaged aseptically in specially designed multilayer containers. At the dairy plant milk is tested for quality and milk that meets the quality parameters is again chilled and pumped into chilled holding tanks. OLPER’S PRODUCTION P ROCESS: 1. 5. which results in a decrease in the average diameter and an increase in number and surface area. and thiamin. HOMOGENIZATION: It is a mechanical treatment of the fat globules in milk brought about by passing milk under high pressure through a tiny orifice. or skim milk as appropriate. by addition or removing of cream. but those that survive the sterilization process are unlikely to grow during storage and cause product spoilage. a product is not necessarily free of all microorganisms." 4. vitamin C (which is already low in milk).Supply chain Report on ENGRO FOODS LTD. Source: Shahid Hafeez Khan 35 . then cleaned (either by being filtered or centrifuged) before Pasteurization followed by standardization/toning and homogenization and then transferred to another holding tank to await further processing. MILK PROCESSING: The milk from buffalos and cows is collected into metal cans. is a much-reduced tendency for creaming of fat globules. which are then emptied into tanks.
once again a quality check is repeated before emptying the container. Dharki. they are relying on 3PLS as according to Mr Salman Goheer. 36 . Engro Foods Limited EFL’S LOGISTICS & WAREHOUSING INTEGRATED LOGISTICS: Engro Foods Pakistan makes sure that their product namely Olpers is available. and ensure products are delivered to you at the right time. at the right place and in the right quantity. Rani pur. Nawab shah. We integrate processes from the farm to markets. no matter where you are in Pakistan. till it reaches the 9.000 liter capacity which is than collected by dedicated specialized vehicles to transport it to the plant for production. Inbound logistics concerns raw milk transportation to the plant. OUTBOUND LOGISTICS: On average. Raw milk comes from the dairy farms to the milk collections centers which are 40 in total & are located in different villages where some quality checks are conducted to ensure the milk quality. and is distributed in the same amount to the distributors all over the Pakistan. Logistics network is thus completely outsourced i. MS Total Quality Management Manager Quality Control-MPD. EFL head of supply chain: “We have outsourced all non core processes of our business like transportation to minimize system wide cost.Supply chain Report on ENGRO FOODS LTD. Once the vehicle reaches the plant premises. Dhokri Rohri and Sahiwaal.(Hons) Food Technology.” EFL do have their own distribution network but transportation services are all outsourced. M. Ahmed pur east. every alternate day Olpers Milk truck arrives at each ware house from Sukkur and Sahiwaal factories. if its up to the mark than it is stored. INBOUND LOGISTICS: For inbound logistics dedicated long vehicles are used.e. MILK COLLECTION FROM VARIOUS CITIES OF SINDH & PUNJAB Lakhi.Sc.
They have 80% dedicated fleets & 20% open trucking especially for the northern areas of Pakistan. Capacity Of 50 feet Truck: Size of item 1 liter 250 ml 1. Outbound logistics concerns finished milk movement from manufacturing plant to the warehouse & to distributors. Its responsibility includes fulfilling the orders of the northern region In addition to Karachi: The transportation of finished goods from Sukkur to Karachi is done through a dedicated truck which can easily carry a 50 feet container. Sindh & Baluchistan. which is done by Naulakha Transport agency. There are 3 warehouses of olpers: Sukkur (Mother ware house) Sahiwaal (Mother ware house) Rawalpindi (Central ware house) Sukkur: Adjacent to the manufacturing plant which covers whole of the south i. There responsibility is to pick the goods from Sukkur and deliver it to Karachi warehouse and on average there are 15 round trips in a month.000 sq ft which is on rental basis & it costs 600. Rawalpindi: It is a satellite warehouse with a covered area of 30. the logistics usually take 1 day to arrive at olpers warehouses in Karachi from their manufacturing factory at Sukkur. For outbound logistics trucks are used.5 liter 500 ml No. From Karachi warehouse it is delivered to the respective distributors according to there required orders in terms of quantities and size of packets.e. it is done through dedicated fleets which is on a monthly rental basis. Sahiwaal: Adjacent to the manufacturing plant which covers whole of the of the central.000/month. Of cartons 934 1552 890 1497 37 .Supply chain Report on ENGRO FOODS LTD.
Sukkur warehouse having a capacity of 1. Each pallet has a capacity of 800 liters.000 liters & a pallet capacity of 2000.000 liters & having a pallet capacity of 5000. Since open trucks return empty once the product reaches the Karachi warehouse. Using pallets to stock the cartons.6 million liters with a daily average dispatch of 350. Because of its perishable nature they are using the FIFO inventory system. They are having a cross dock warehousing system at Maripur and it is being operated by transporter him self. 38 . Once the packaging is done the milk is stored in equibator for three more days in a warehouse before loading it on the truck to make sure that the quality of the milk is up to the standard. The cost of downward logistics (Sukkur) for the company is cheaper in comparison to the upward logistics (Karachi). in Sukkur & Sahiwaal and the other being the central warehouse located in Rawalpindi. There is a climate control system in there warehouses as the temperature of Sukkur & Sahiwaal shoots up to 45 degrees in summers. WAREHOUSING The company has three warehouses out of which two are located within the production plant i. They are maintaining 6-7 days safety stock. Fork lifters are used to stock the pallets to the desired dock The temperature of the warehouse should be maintained at 25-28 degrees in order to keep milk in its fresh condition. Sahiwaal warehouse having a capacity of 4 million liters with a daily average dispatch of 400.e.Supply chain Report on ENGRO FOODS LTD.
According to the distribution. ORDER PROCESSING The ordering process at the warehouse starts with generation of suggested order list (SOL) triggered through the system. They use specialized milk tanks as mentioned above for the inbound of raw milk & for finished goods they use proper palletization. determination of items to be ordered and how much to reorder MATERIAL HANDLING Material handling is a process of handling the material in a proper way so that the rate of losses & damages can be minimized for good. Olpers have 350 distributors across Pakistan. Olpers manage their materials very efficiently by using latest equipment for raw materials & finished goods. Pakistan is divided into three geographical zones and then in further Regional Sales Offices.Supply chain Report on ENGRO FOODS LTD. then fork lifters are used to put the pallets in the right place in the warehouse which is then cross docked. DISTRIBUTION NETWORKS Olpers focus on every major city of Pakistan. Central Zone o Lahore o Gujranwala o Multan South Zone o Karachi o Hub o Punjgur o Nawab shah SELECTION CRITERIA OF OLPERS FOR DISTRIBUTORS SELECTION : Financial Strength of Distributor Efficient Infrastructure Logistic Fleet Efficient and Trained Sales Force 39 . North Zone o Rawalpindi. All the transportation is outsourced. SOL is done to determine the future demand forecast. o Peshawar.
40 . quality and brand. VALUE ADDITION BY DISTRIBUTORS: Distributor’s credibility and goodwill is not used as a tool to pressurize the retailer to buy the bulk but they are taken into confidence by product features. PURCHASE ORDERS Purchase order is an instrument given by the buyer to the seller mentioning the specification of goods. In the case of Olpers the distributor is the buyer who first submits the payment in advance and then gives the purchase order to the sales department via e-mail whenever he is low on inventory. Afterwards distributor repute plays a value addition role to whole transaction. CUSTOMER’S FEEDBACK: Customer feedback is required for further planning which is the responsibility of the distributor to provide to Olpers’ team. Past Experience of Distributor Market Knowledge The use of new Technology (IT) NEGOTIATION ON PRICE : Olpers doesn’t negotiate on price with distributors there is a fix Mark-up/Commission which is 4% for all distributors SALES TARGET FOR DISTRIBUTORS: Monthly sales targets are established after discussing the market requirement with the distributors. Whereas sales department is also responsible for the dispatch of the desired goods by the customer.Supply chain Report on ENGRO FOODS LTD. quantity & price in order to get the timely delivery of the goods from the customer. These e-mails are then processed in the form of a proper purchase order. which is then send to the finance department for invoicing purpose.
Tetra Pak is the only option available to Olpers for packaging 41 . REVERSE LOGISTICS SHELF LIFE OF OLPERS MILK: 71 days RETURN POLICY OF OLPERS MILK: Olpers Milk has an efficient return policy for inventory in case of any defect. Source : Mr Salman Goheer. without jeopardizing the safety.Supply chain Report on ENGRO FOODS LTD. than it is drained. Head Of Supply Chain. Every carton and item has assigned a certain batch number. If any defect has found in item or carton (in small quantity) then the batch number of that item or carton is noted and disposes the defected item right on there and if it is large number than it will taken back by the same delivery truck who dispatches the orders to the distributors. They have a normal losses rate of 0. Once the large number of defected milk is back to the company. quality or consumer acceptance of its products. EFL is dependent upon Tetra Pak for the packaging of its entire dairy products.40 % due to defected Milk. PACKAGING Engro Foods is committed of reducing the environmental impact of packaging. Engro Foods ltd.
To meet this objective Olpers delivers fresh milk to its customer via using tetra Pak. And also protects the product against contamination until the product reaches the consumer.L are integrated with each other like. All Business functions of E. Take into account new packaging materials and processes that reduce the impact on the environment of unnecessary transportation. utilization and disposal.Supply chain Report on ENGRO FOODS LTD. Engro Foods have following objectives in mind regarding packaging of Olpers: Result in the lowest possible weight and volume of packages whilst still maintaining pack integrity. Production Logistic Accounts & finance 42 . Decrease packaging waste at all stages in the supply chain. Packaging materials are Stored in a dry place away from manufacturing areas and it is used in a clean and sanitary manner which is non toxic Packaging is carried out in away that avoid contamination of processed products. because it is having monopoly in the packaging sector in Pakistan As far as milk is concerned packaging is very important.F. and increase the recyclables and compatibility of packages with existing waste management schemes. without sacrificing in health measures. Increase the use of recycled materials wherever possible. EFL ERP SYSTEM ECPL has its own dedicated Network of Intranet with a backbone of Internet & PTCL Fiber lines. including package manufacturing. Avoid the use of substances that can adversely impact the environment during packaging production and disposal. It is perishable item which requires special packaging to preserve it for few months. Through this sophisticated & widespread intranet.
The application has five different modules i. Employees at regional offices including Head office can access and run applications using web browsers from anywhere on the network whenever needed.Supply chain Report on ENGRO FOODS LTD. This software for such uses has been then installed on intranet web Servers.e. EFL’S SALE & DISTRIBUTION SYSTEM: This application helps in the accomplishment of daily sales operations & management. which helps in Order Processing Inventory Control Sale management & reporting executive information system These applications are designed to interface with. existing company database and legacy system. Setup Transaction Query Report Administration 43 . Many customers application has been developed at ECPL. and access. Marketing Sales This Widespread intranet is also offering a platform for developing and deploying critical business applications to support business operations and management decision making across the Internet worked enterprise.
Supply chain Report on ENGRO FOODS LTD. Stock Pending & Cancellation Report 8. Remember. Distributor Account Statement Report All above-mentioned reports can generate from different angles like o Regional report o Area Wise Report o Territory Wise Report o Distributor wise o Day wise etc Reporting of the primary sales: Primary sales are updated as a result of “ORDER PROCESSING”. The regional office receives the allocation for next one day. Sales operation officer has mainly concerned with two modules of the Sales & distribution system i. Distributors detail Ledger 6. Logistics Reports 10. Primary Sales Report both Invoice Based & order Based 3. The Report modules convert distributor’s transactional information into different types of reports like: 1. 44 . This module helps to process. Secondary Sales. Secondary Sales LPD Report 4. We divide the target achieved by the team up till now with target set. Reports. Distributors Payment Receipt Report 7.e. The primary report shows us two factors that are value and volume. Distributors Claim Summary Report 9. It shows us that how much target has been achieved up till now in the year considering 250ml. Transactions. Regional Order Summary Report 2. Primary & Secondary Day wise Report 5. Order processing and their Claims. distributors Payment information. 500ml and 1000ml and total UHT milk.
We can then look more closely at the reasons for the switch and work on winning these customers back. 3. These records are first updated manually.Supply chain Report on ENGRO FOODS LTD. CRM AT EFL Engro Foods Keeps Track of 60.” – Danish R. Head of Consumer Relationship & Manager Innovations. For example Year to date 6444 / 5161 = 1. Demand draft. The ability to see and act on this type of information is a competitive advantage. Engro Foods Limited 45 . We run reports on the Oracle CRM system to find out which customers are loyal to our brands and which ones are also buying other brands. Payment procedure: Three instruments are considered for payment procedures: 1. As a result payment receipt report is generated which shows us the name of all the distributors who made the payments and weather the payment was sent via remittance plus our demand draft etc and name of the branches through which the remittance was sent.000-Strong Consumer Base with On Demand CRM Solution. When distributor sends us the amount it is credited in our account as it becomes or liability that is because we have not delivered the stock yet. Pay orders. This is something we simply cannot do using spreadsheets.S. Then all the information given by the TSO’s is fed into (EFL Sales & Distribution Systems). and it is vital for us to be on our toes. stock received by the distributor yesterday. 2. month to date sales and secondary sales.Os report all the secondary sales from the last day via fax as per company policy. These claims are verified by the TSO’s and are sent to the regional office for verification after the verification at the regional office the claims are logged on to the system and are sent to the head office after verification from the head office the acknowledgement is sent to the distributor. “We are a commodity business. Syed. This gives us the record for the opening stock. After conducting the payment procedures another document is generated which is known as the Distributors Account statement summary.2485(its mean that they are 25% ahead of their target) Similarly we can find the Month to date volume wise and also value wise Reporting of the secondary sales: First of all T. Distribution claim: The distribution has to process all the claims before 6th of every month on the given formats. Remittance plus.
“As we expand the use of the solution.” “With Oracle looking after the system for us. The brand is well known so customers will automatically have a brand association with Olper’s and see it as a premium quality product.” said Danish. we know we can count on Oracle to guide us through the process. head of consumer relationship & manager innovations. complete customer history. eliminating the need for repetitive manual entry and ensuring the accuracy and currency of information. which allows us to interact with customers at those times that are meaningful to them. it proved untenable when the business began expanding. 46 . ENGRO is world renowned so it can easily attract foreign investors in backing it against other competitors such as Nestle. It can also distribute the brand through better channels because of its long term relationship with distributors in the agriculture sector. IT and infrastructure business. This means that consumers can relate their former image of ENGRO foods to Olper’s. where previously transaction and personal details were dispersed over multiple spreadsheets. Rapid Growth Spurs Demand for CRM System: Prior to the start of 2009.” SWOT ANALYSIS OF ENGRO FOODS STRENGTHS 1. Information At Tips: The Oracle CRM system has enabled Engro Foods to dispense with spreadsheets to record and track information. Engro Foods was relying on Microsoft Excel spreadsheets to record and manage customer information. the chances of errors are less and if any issues do come up. While this was acceptable when the company was first launched. we know they can be resolved quickly.” said Danish R. Syed. “It is a way for us to build strong relationships with our most important customers. “The system tracks details such as birthdays and anniversaries.” said Atif Muhammed Ali. “Our business has grown more than 10 times in the past three years. Engro Foods.Supply chain Report on ENGRO FOODS LTD. ENGRO foods can easily afford research and development costs for Olper’s have in order to introduce new products. applications. manager. Engro Foods. Engro’s back: Olper’s is a brand of ENGRO foods. The system also provides a single. Customer data is now entered and stored in a central database. ENGRO is a well established brand name in Fertilizer.
Supply chain Report on ENGRO FOODS LTD. This is an added advantage and strength for the company because it will never be short of milk production. Its taste: quality proposition and world-class quality proposition system. it is also setting up another milk processing plant in Central Punjab (Sahiwal) with an investment of Rs. 2 billion (US $ 33million). 3. Moreover. WEAKNESSES: 1. Olwell TVC: Olwell ad which is based on Western life style. 5. 6.Third-Generation Plant: EFL only. 2. or half nude lady in a cat walk or men admiring the figures of a lady in mix gender health club. Positive response from customers: In first year. JWT Asiatic and MARS marketing and advertising agencies. EFL has hired various global research partners like AC Nielsen. Half 47 . EFL crossed 1.4 billion sales figure which shows customers’ satisfaction upon EFL’s products. PR with farmers: ENGRO has been interacting with the farmers for fertilizers and has gained quite a good reputation over the years. The farmers also won’t have to look elsewhere to sell their milk. It has led to a strong bond and long term relationship with the farmers who are willing to supply milk to the company. has the third-generation UHT milk plant in the country. which is a highlight of Olwell packaging. In this ad they are creating associations with the brand through the stripes. To develop its future portfolios. 4. ENGRO foods brand management showed a man who put off his clothes & remain just in his undergarments. Mindshare. Strong consumer & product research: Olper’s done a strong consumer & product research before and after launching the product. EFL plant is the only plant in Pakistan that uses Bactofuge technology to virtually eliminate bacteria and ensure premium quality and hygiene. This has provided them the perfect launching pad to eventually emerge as a global player in the food industry.
But EFL’s brand portfolio still consists of just 3 products i. 6. The company may need to find a suitable color in which to focus its upcoming marketing strategies. Low Quality Milk: EFL is not having its own dairy farms. Packaging: EFL is dependent upon Tetra Pak for the packaging of its entire dairy products. This may create problems because when a consumer enters a grocery shop. who have strong religious beliefs. 3. the talent. it largely collects loose milk from farmers & gawa las through its 40 milk collection centers. when EFL launched its first dairy product. Also. making an ad that should give the brand the most premium look and feel amongst the target consumers but on the other hand they were least bothered about the ethics. Tetra Pak is the only option available to Olper’s for packaging because it is having monopoly in the packaging sector in Pakistan. Olper’s Milk. When making the ad. It increases the milk collection & distribution costs. Olwell Milk and Olper’s Cream. naked people have been shown with tattoos of the same stripes in order to show that they are loyal consumers of Olwell. Owning Red Color: The company has not owned the color red like Nestle has a green Milkpak.Supply chain Report on ENGRO FOODS LTD. Due to this reason. where practicing Muslims reside. is Pakistan. The brilliant marketing people at ENGRO Foods failed to analyze is that the market they are targeted the ad on. 2006. situations and locations connects well with the ad to give Olwell a premium positioning.e. 48 . the brand managers were focused on. and also increases the chances of milk getting spoiled because of increased travelling time. which sometimes is of low quality and impure because they add vegetable oil to milk to get higher prices. Narrow brand portfolio: It has been more than a year now. Milk collection & distribution costs: EFL’s 34 out of 40 milk-collection centers are located in Punjab. then he/she might have problems in recalling the brand because there is no color association attached to Olper’s. Whereas its competitors like Nestle and Haleeb Foods have a much diversified line of dairy products. 4. Haleeb has a blue carton etc. 5. Tetra Pak can charge them higher and it could increase the production costs. 2. religious beliefs and cultural values. Olper’s Milk on March20. whereas its only milk processing facility is situated near Sukkur (Sindh).
This is an opportunity for ENGRO foods because previously due to weather conditions and other reasons there was lots of wastage of milk but now that can be reduced as farmers will be better able to store milk for longer time periods. Increased consumption of PLM: Competition may create opportunities for the company because each competitor in the milk industry wants to increase penetration of processed liquid milk and so they will create awareness for consumers through different advertising media. country’s annual milk production is expected to grow at an additional 3 billion litres in the next few years. from a total herd size of 50 million milch animals (buffaloes andcows). Milk is the largest commodity from the livestock sector accounting for 51 percent of the total value of the sector. Increased funding by Government: Government has decided to increase farmers’ funding.8 percent of agricultural value added and about 10.8 percent of the GDP. This will ensure the increase in the consumption of processed milk instead of lose milk and so will in turn lead to increase in sales for the company. 4. 3. 2. Due to the steps taken by the government and private sector. 49 .Supply chain Report on ENGRO FOODS LTD. Therefore there will be an opportunity for accelerated growth. OPPORTUNITIES 1. Livestock accounts for 46. whose value is more than that of the combined value of wheat and cotton. Third largest producer of milk: Pakistan is the Third largest producer of milk in the world with a total production of 32 billion liter of milk a year. Awareness: Growing dissatisfaction with loose milk and increasing awareness about health and Hygiene issues have led to increased processed milk consumption. This is quite an opportunity for ENGRO foods as there is lot of growth in this part of the sector.
THREATS 1. It is important that Olper’s comes up to the expectations of the customers and fulfills its conformance quality that is the company meets its promised specifications. Competition seems to be getting tougher as a result of new players entering the dairy market. lose milk is still cheaper than packaged milk and that is also one factor that people still prefer to buy lose milk. For Olper’s it might be difficult to penetrate in a market where the loyalties exist for such brands as Nestle and Haleeb. 2. Company has planned to make Omore world class premier quality brand like existing brands of Engro Foods. cereal for babies etc They future plans of own farms are also on board. Competition: Competition may pose a threat because the company will have to maintain its leadership in an expanding market so that it doesn’t lose its market share to its competitors. They have planned to move other dairy products as are being offered by its competitors like yogurt. Consumer’s preferences change with time and prices might create certain barriers in terms of the profit margins for Olper’s. It’s a way to improve quality by removing all doubts in consumer minds about old milk collection ways form govala 50 . For example. These brands have been in the milk industry far too long and have left a mark in the minds of consumers in terms of quality. FUTURE PLANS OF ENGRO FOODS LTD. flavored yogurt (raita). Company is also working on dry milk (KhushkDoodh) like cereals in coming years. Perceptions and Price Differentials: Consumers’ perceptions and price differentials can cause a threat for the company.Supply chain Report on ENGRO FOODS LTD.
51 . today Engro Foods considers itself in no need of a benchmark anymore since it has actually surpassed the performance of its competitors and therefore now it is viewing its own previous performance as the standard to work against. It chose Nestle as a benchmark and therefore set up its own milk collection centres based on the layout and approach adopted by the well entrenched Nestle. While demand reduces during the winters and increases during the summer. the supply chain team in its quest for establishing trust and harmony with the dhodhis. ISSUES AND CHALLENGES Supply chain management in a country grappling with numerous uncertainties and that too in the dairy milk industry is replete with difficulties. Hence. this is a challenge that Engro is attempting to meet to the best of its resources and capabilities. Demand Supply Imbalances The first challenge that Engro Foods has to deal with is the reconciliation between demand and supply. However. has to accept milk throughout the year. They are working with UNDP to initiate women’s veterinary workers program They also signing a micro financing model for dairy farming with Pakistan Poverty Alleviation Fund (PPAF) BENCHMARKING AT ENGRO FOODS Engro Foods certainly believes in benchmarking in order to achieve a better standard of performance. where the two are following different patterns throughout the year. When the organization was being established back in March 2006. the company and in particular its dynamic supply chain team had two options regarding the benchmark for the company operations. which is much easier to store and much more resistant to deterioration over time as compared to liquefied milk. Engro foods is no exception and the supply chain team has to deal with various issues and challenges day in day out. Thus in order to ensure that the all year round supply is utilized well. challenges and bottlenecks.Supply chain Report on ENGRO FOODS LTD. or Haleeb Foods’ contractor based milk collection mechanism. Engro Foods actually converts the excess supply into powdered milk. Engro Foods is working with different NGOs to meet the Corporate Social Responsibility in country. It had a choice between Nestle’s extensive and well reputed Milk Collection Centre system.
This leads to a difficulty in exercising control and supervision of the overall distribution activities. feedback is being collected nevertheless and contact is maintained with the distributors as much as possible. 52 . (Head of Supply Chain). These farmers not only lack knowledge about ways to optimize the milk extracted from their animals but also are unaware about the ways to take care of the animals. This leads to lower productivity and smaller quantities of milk being produced. timely delivery. However. Engro Foods is trying to make a difference by spreading awareness amongst these farmers through education. proper storage. However. whether in adjacent or far-flung areas. Engro Foods and some secondary research which was largely internet based. But these problems are addressed by the maintenance of adequate supply at the premises at all times in the form of powdered milk in order to deal with any sort of contingency situation.Supply chain Report on ENGRO FOODS LTD. delays may occur which might disrupt the overall production process. A major constraint for the research was the inability of the team to visit the actual plant which is situated far away from home in Sahiwal and Sukkur. As a result. No documents were shared with us by the company. and appropriate marketing procedures cannot be obtained easily. mostly lack proper roads and highways that would enable milk to be transported easily and in lesser time. Salman Goheer. Limitations of the Research This report has been compiled entirely on the basis of the interview we conducted of Mr. Infrastructure Issues The two plants are located in the interior areas of Punjab and Sindh and the villages from where the milk is procured. Mr. Lack of Control over Distribution Channels The distribution of goods to the retailer who then sells it to the final consumer is a responsibility that is not directly under Engro Foods but rather being handled by the approximately 200 distributors Engro Foods supplies to. Thus. Accurate information with regard to sales. Lack of Knowledge amongst Farmers A major issue that is faced on the raw materials procurement side is the lack of awareness and insufficient knowledge that is common amongst various small farmers in the villages milk is collected from. Nagi insists that even though third party logistics and secondary sales are being employed. the report has been prepared with these constraints in tow at every juncture. training while also organizing vaccination programs that can make the livestock resistant to various diseases. while the Milk Collection Centres that form a significant part of supply chain management at Engro Foods also could not be observed because of their hard to access locations.
EFL is not having its own dairy farms. RECOMMENDATION We are recommending following important factors which we felt missing in their supply chain: 1. To build a regional ware house in Karachi that fulfills there supply side gap & to reduce upward logistics cost. Due to this reason. So it’s an opportunity for them to grab & enjoy the flavor.Supply chain Report on ENGRO FOODS LTD. Tetra Pak is the only option available to Olpers for packaging because it is having monopoly in the packaging sector in Pakistan. 53 . 4. 2. Tetra Pak can charge them higher and it could increase the production costs so they need to invest their funds for having their own packaging system. 3. EFL needs to have their own Dairy Farm so that they can meet the increasing demand as their market share is growing by 12% annually & to have quality milk procurement as well. They should expand their brand portfolio by investing in yogurt market as their competitors are enjoying it just because of low competition their otherwise Milk pack has its brand name in drinking milk market only. EFL is dependent upon Tetra Pak for the packaging of its entire dairy products. which sometimes is of low quality and impure because they add vegetable oil to milk to get higher prices. it largely collects loose milk from farmers & gawalas through its 40 milk collection centers.
Umair Nagi (Supply Chain Development Manager at EFL) Mr. (Head of Supply Chain at EFL) Mr.com 54 . Pakistan Dairy Industry. Ammar Mursalin. Director Marketing EFL Mr. Hassan.engrofoods. Salman) Mr. HR Assistant Manger. Ali Akbar. white Revolution paper www.google. REFERENCES Mr. Salman Goheer.Supply chain Report on ENGRO FOODS LTD.(Assistant of Mr.com www. EFL.Dilshad Ahmad(Quality Controll Officer EFL) Mr.
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