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Supply Chain Management

Project Report

Assigned To:
Bilal Mehmood
MBA3Y02123041

Assigned By:
Sir Sarmad Irfan

Lahore Business School (LBS)

University of Lahore (UOL)

Executive Summary:
As a student of MBA, I have been assigned a task to visit organization regarding the
supply chain management. Our respected teacher, Sir Sarmad Irfan gave us this
individual project to get knowledge of any organization and to know the supply chain
issues, problems and then give recommendations on those problems. I visited the
company Pan Power International (PVT) LTD. Basically it is a group of industries
which manufactures Transformers, Auto Rickshaws and Drums also, but I choose their
product namely Pan Power Transformers.
By visiting the organization and getting knowledge from different managers, I get a lot of
knowledge about the making of transformers and how do they work. The lab manager
also showed me their plant where the transformers were being made. He tells me all of
the production steps and different sections of the production plant. After the whole
process comes to an end, I visited the procurement manager and ask questions about
their Supply chain. He answers my questions and I also ask him about the history of the
company, he told me that also.
The problems and issues of the organization and the recommendations of these
problems are listed in the report.

Introduction:
Objective(s) of the project:
The first main objective of this project is that we will learn by ourselves. We work
individually, because by doing so, we will work by our self and we have a chance to
enhance our abilities. The second main objective is that we know the market conditions
and how the organizations effected by different issues and problems. The third main
objective is that we get familiar with our subject (Supply Chain Management) by
interviewing the executives and by asking some questions related to Supply Chain.

Company Introduction:
Pan Islamic group of companies (PVT) LTD was established in 1979. It is a wellestablished manufacturing, engineering, installation and services oriented company.
The total number of employees in this whole group is approximately 300 and they give
100% safety to their workers, by doing so, this company is registered by ISO 9001:2008
(Quality Management system). The group is working presently on three Businesses:

Project management, engineering and manufacturing (PIIL)


Distribution transformers from 15KVA to 5000KVA (PIIL)
Trading and intending business

History:
The history of the company is that it was an army products manufacturer company. After
that, it started manufacturing the drums and jelly cans. After closing this business it
started manufacturing Telecom towers which were of High Tension Power.
After this, they started making transformers, and their other group of company started
making the auto rickshaws (Ascent Engineering (PVT) LTD).

Transformers Production Process:


The following steps include the making of step down transformer. Step down
transformer converts the high voltage into low voltage. It ranges from 220KV-440KV.
Firstly, they purchase bundles of core sheets from France (1000 mm thick sheet) in bulk
and then the process starts in step by step sections.
1. Core Slitting Machine:
In this section there are CNC (Circuit Numeric Control) machines both
manual and automatic. This machine cuts the core sheets into pieces.
2. Core cutting Section:
When the core sheets cuts into pieces, the workers manually operate the
sheet pieces and give it different shapes.
3. Core Stacking Section:
In this section, the pieces of different shapes arranged as open stacking
and case stacking. Open stacking is for 15KVA transformers, and case
stacking is for 100 KVA transformers or more.
4. Coil section:
There are two types of coils used in transformers, LT (Low Tension) coil
and HT (High Tension) coil. 1 turn of Low Tension coil is equals to the 47
turns of High tension coil. After varnishing of these coils, they are placed in
oven for 72 hours. Paper cutting insulation is also included in this section
which ranges from 1.5 mm-20 mm.
5. Core Coil Assembly Section:
Core and coil placed together, Low tension coil is placed inside the High
tension and yoke them.
6. Connection Section:
Low tension and High tension coils are connected together in this section.
7. Oven Section:
After the connection of LT and HT coils, it is placed in oven again for 48
hours. There are three ovens in Pan Power, one is electric and two are on
gasoline. The capacity of these ovens is different for different
transformers.
Size of transformer
15 KVA
25 KVA- 50 KVA

Capacity
17
12

100 KVA

10

8. Tanking Section:
After oven section, bushing of LT and HT is done in top plate section and
the material used is made up of brass.
9. Lab Area:
The losses of iron and copper are tested here and the nuts, bolts are also
tightened here on the transformer.
10. Hardware Section:
Here the elliptical tubes got cut and bended which are situated on the
outside body of transformer. The main outer part of transformer is named
as tank, it is shaped separately. The air pressure of the tank is checked
also and after that, it is also tested in Shot Blasting machine, where very
small balls hits the tank and clears it.
After all these tests, the tank and tubes are painted with red oxide paint
which works as rust controller and then the grey paint sprayed on the
outer part of transformer.
Whenever a transformers complaint is registered and it looks perfect from outside, then
they do diagnostic tests to check the transformer. The diagnostic tests can check the
following problems, Turn to turn shots, Open windings, major insulation damage, high
moisture levels, mechanical damage and core overheating.

Introduction of problem area:


Pan Power Transformers main business is to sell their transformers to WAPDA (Water
and Power Development Authority). So when the WAPDA give Purchase Order to them,
then they make transformers. 97% of their business is run by WAPDA and the other are
very few orders from farm houses, organizations and from housing schemes. The main
problems for them are that they have many competitors, electricity, IT department,
transportation and safety inventory.

Problem Background:
Following are some of the problems I have found in Pan Power:
The main and biggest problem in Pan Power is that they do not have an IT department.
All the records and data are listed in registers. The purchase orders, incoming of raw
material and all other things are listed in different registers.
Second problem is that they have to take a transport to deliver transformers to WAPDA
on rent. They do not have any loader/truck of their own.
Third problem I found regarding supply chain was that, they said their buffer inventory
for transformers is 200. But the area where the transformers are placed is not
compatible for 200 transformers. The area was very small and safety inventory cannot
be reached to 200 there. And they do not have any other warehouse for buffer stock.
Other problem that they are facing includes the electricity. The electricity load-shedding
is causing problems in their production because they have to manufacture transformers
on their generators and they use diesel in very big quantity for it. This load-Shedding is
the biggest problem for not only the organizations, but also for the whole nation. Many
organizations have closed their operations and manufacturing because of this loadShedding.
Pan Power has a lot of competitors in the market as many of them are famous by their
names. WAPDA is the main body to supply electricity to Pakistan, so they have many
suppliers who give transformers of different sizes to them when they give order.

Problem Analysis:
As I interviewed the Procurement Manager and the Production Manager, I got a lot of
information from these managers. Procurement manager, Mr. Mazhar Iqbal told me that
when the manufacturing of transformers started after the purchase order, they will work
on the lead time, for example, they have given 120 days for 1000 transformers. He also
told me that they are working on responsive supply chain. They outsource the core from
France which is the main material in the making of transformers and copper is
purchased from Swat (Pakistan). He also told me that they coordinate with the suppliers
with the help of BOQs (Bill of Quantity). Pan Power manufactures Pole mounted
transformers and Pad mounted transformers as well. The main and first problem I
analyzed was that they have to convert their all billings and orders from manually hand
written to computerize automatically software. By doing so, they can save their time and
hire only one person for that who will be eligible to perform these tasks on computer.
The second problem is that they have to increase the facility for safety inventory as if
they are able to give their order to WAPDA on time. Because transformers take many
days in manufacturing and testing it. Thirdly, they are working on just in time and
responsive supply chain as told by the procurement manager; they need to improve
their supply chain. By doing so, they will be able to reduce their running costs as well.
The other problems includes the load-shedding of electricity, they start their generators,
if load-shedding is for 8 hours daily, then their diesel for generators which is consumed
is about 200 liters daily.
As the load-shedding has increased from 6 hours to 8-10 hours. And if they are failed to
build transformers on time, then their competitors are available in the market.

The list of competitors of Pan Power is:

PEL
SIEMENS
Transfo Power

Hammad Transformers
Transfab power
Sky power

PEL and Transfo power are famous because of their names.


Pan power did not compromise on their quality and cost. So they do not have to
manufacture low quality transformers in cheaper raw material and at cheaper cost.
The analysis of my data is that Pan Power should make changes in their supply chain to
increase their market share in WAPDA because it is still at 2.5% from many years.
Whereas, PEL and SIEMENS have 28% of shares each in WAPDA. They should start
their IT department for all the check and balances in the company and for purchasing
and selling. As the consumption of electricity is increasing by 2% every year in Pakistan,
Iraq and Iran, thats why they will have to make more transformers.
The identified issues causing inefficiencies in the firms operations and making it less
competitive in the market is that they do not have much buffer stock, the strategy they
are implementing on is that they are producing after getting order from WAPDA. They
should do marketing of their business and different kind of transformers to become big
giants in industry in coming years.

Recommendations:

To resolve the above discussed issues and problems which are faced by the
organization, they have to take some of the following steps:
IT Department:
Pan Power should have to hire an employee who knows computer very well. They have
to maintain all of the records on some software or in excel. The purchase of raw
materials, the selling of transformers, etc. they should also maintain a log book for that
on computer. By doing this, they can manage their business properly and help
themselves to get rid from lots of burden.
Transportation:
Pan Power should purchase their own loaders/trucks to deliver their transformers to
WAPDA so they can get money for delivering the transformers, and not to give any rent
for the trucks. This can also give their company a plus point in the market.
Buffer Stock/ Safety Inventory:
Pan Power has not much space to place their buffer stock of more than 50
transformers. They have to purchase a warehouse near the factory or they have to
increase the space in the factory to place the safety inventory. Because when they have
stock in their safety inventory, then they will be working on just-in-time and they will be
more responsive than they were before. They can easily change their transformers
when WAPDA do backward supply chain of transformers. This will also make goodwill of
the company in the market.
Other Recommendations:
The load-shedding problem is very common in our country, so they will have to work
more in those hours when the electricity supply is available. They will bear less loss in
the running costs. The competitors of Pan Power are very much in numbers, so they
have to increase the number of facilities in their whole organization.

When these issues will resolved, it would be beneficial for the companys image, the
companys market shares will be increased in the upcoming years, and the company
will run their functions very smoothly and properly.
These are all the issues, problems and recommendations which I thought that would be
of Pan Power organization.

Thank You

References:
http://www.imia.com/wp-content/uploads/2013/05/EP09_2003FailureAnalysisofTransformers.pdf
http://piil.com.pk/panpower/company-profile.php
http://www.piil.com.pk/