ACKNOLEDGEMENTS

All praise to ALMIGHTY ALLAH who is the most Beneficent and Merciful. I avail this

opportunity to bow my head before ALLAH ALMIGHTY in modesty who blessed me with

abilities for completing this piece of research. Countless salutations upon Holy Prophet

HAZRAT MOHAMMAD (S.A.W.W) whose teachings are the Torch of Guidance &

Knowledge for Humanity till the Day of Judgment.

We feel great pleasure and honor to express my gratitude and obligation to my Resource

Person Mr Asher Ramish, Assistant Professor, School of Business and Economics for his

countless hours of reflecting, reading, encouraging, and most of all patience throughout the entire

process. This work would have been impossible without him.

We would like to thank Mr Wajid Rehman, Senior Planner Shoebox and Mr Abu

Bakar, Member planning team, Shoebox for agreeing to cooperate for the project and for their

encouragement and moral support.

Mohammad Yaseen

Heena Zubair

Osama Hassan Tufail

Mohammad Abdullah Tahir

Hafiz Junaid Ayub

Hassaan Baig
Introduction
In the present era of mobility and advancements at another level compared to recent past, one has
be on his toes in order to compete for or even survive in the market. Talking about business
dynamics and fast pace of the society, businesses especially manufacturing ones are at the core
of this race. We will be discussing a manufacturing firm in the following project. Keeping in
mind that every manufacturing firm has machinery, financial resources either equity or loan and
work places, this whole becomes the combined competitive edge i.e., every company has it. The
difference came into play when we talk about human resource. This is where competitive
advantages push some companies to the top and some to bottom.

Talking about Pakistan, geographical analysis of the region amazes to the extent that how
blessed is Pakistan from natural resources thus fueling its manufacturing sector to produce more
and more goods and services and sell them at local as well as at international level.

Pakistan is a developing country and it has to focus more on balancing out the trade deficit as
well as meeting the demands of the consumer market. Pakistan imports and exports footwear
materials throughout the year both its raw materials and finished products. According to Pakistan
Footwear Manufacturers Associations (PFMA), Pakistan imports footwear materials in three
categories i.e., Leather footwear, Canvas footwear and Other footwear. Following chart shows
the statistics of imports by footwear industry and its comparison to previous year.

Footwear 2015-2016 2014-2015

Quantity Value Quantity Value
(Pairs) (000) Rupees (Pairs) (000) Rupees
Leather 6,248,677 2,835,730 8,050,697 4,007,511
Canvas 267,240 118,855 214,560 62,770
Other 11,798,379 6,543,855 9,929,598 4,429,226
Total 18,314,296 9,498,440 18,194,855 8,499,507

According to these stats, Pakistan has a stable import of footwear in recent past before COVID
appeared in early 2020. There is not a significant difference of import demand from year 2014 to
2015. According to trading economies, Pakistan has an import of footwear industry and like,
around $37.37 Million in 2020. It is ranked somewhere in the middle of the list of imports by
Pakistan according their worth. Now, coming towards exports Pakistan is at trade surplus in case
of footwear and like industry, as Pakistan has its exports at whooping $122.74 Million as
compared to only $37.37 Million.

1
Section 2: Supply Chain Management
There is no single definition of Supply Chain Management exists. People study and define
supply chain as a marketing extension as well i.e., making products and services available to the
end customers, also as operations management extension which focus on transformation of raw
materials to work in process and then into finished goods. However, whichever definition we can
conclude that supply chain management is very essential portion of management which manages
product or service at every stage until it reaches from supplier to end customer. In this regard,
supply chain management is make or break the company element.

Expectations of customers have gone up on how quick and cheap the products travel to them,
obviously because of high competition. Thus, supply chain management is the field for
hardworking and innovative individuals who can maintain relationships and work in an
integrated way because it will give them that little edge which is required.

 Apple’s supply chain is rated as number 1 by Gartner’s top 25 supply chains

 Nike’s supply chain consists of 3 portions. Outsourcing, diversification and corporate
social responsibility

2
Section 3: Footwear Industry
Footwear industry is a considered as a part of Apparel industry worldwide. Pakistan’s major
production and manufacturing sector is cotton which is exported as well. This cotton is one of
the many supplies to apparel industry. With the passage of time apparel industry of Pakistan is
making growth which is a good sign for supply chain managers to work harder and make their
name on international level. The Pakistani apparel retail industry had total revenues of $9.1bn in
2018, representing a compound annual growth rate (CAGR) of 5.9% between 2014 and 2018.
The menswear segment was the industry's most lucrative in 2018, with total revenues of $4.6bn,
equivalent to 50.4% of the industry's overall value.
Footwear contributes less than one percent to Pakistan's global exports. Despite the low
contribution to the international footwear market, Pakistan is the seventh largest producer of
footwear, manufacturing more than 2.0 percent of all footwear produced worldwide.
Keynote: United States has the largest footwear market in the world, amounting to
approximately 79.86 billion U.S. dollars in revenue in 2017.

3
Section 4: ShoeBox (easy fashion)
The company that we are considering for the supply chain management project is Shoebox.
Shoebox is a shoe manufacturing firm, headquartered in Lahore. With high competitors in the
market, shoebox still making its name in the market because of its up to date market policies and
keeping in mind its target population. There are around 53 stores of shoebox and the number is
still increasing. Shoebox has outsourced its production of shoes of different kinds along with
packing in boxes as well as its logistics, thus making most out of the key decision making and
getting the best of cost benefit analysis. Whereas, bar coding on the products in being carried out
in the warehouse of the company by itself. The company maintains a certain level of inventory
in the warehouse after dispatching products to different retail stores so in case of being sold out
at the store, that specific article of shoe is delivered immediately to the retail store.
It is important to mention here that the company designs the products by itself. It is done by the
product development department. Sometimes, the company also take designs from the vendors as
well. After designing is completed, vendors are given designs to make samples. Samples are then
checked, approved, modified or rejected. After this stage, final order is placed with the vendor
after negotiation on price, time, material and packing. After receiving goods in the warehouse,
quality check through random sampling is again carried out to make sure that products are as per
ordered. Then, bar coding is done on the product by the company. The central information
department highlights the retail stores with high, medium and low selling points and gave the
dispatch orders to these retail stores by again an outsourced company named NCCS. Thus, the
product reaches the retail store and the ultimately to the customer.
Shoebox has a very strong and professional supply chain management staff working hard to meet
the customer’s expectations and competitiveness in the market where Bata, Service, ECS and

4
several other brands exists. Shoebox is targeting the lower to middle class and upper middle class
population keeping in mind the overall population of the country (Pakistan) where they are
operating.
Due to pandemic online meetings were carried out with different officials from shoebox and
discussions were being carried out which are mentioned in the attached documents of minutes of
the meetings.
In the following portion of the project, we will be discussing shoebox from different angles of
supply chain management by applying different tools and techniques and will find out the
conclusions at the end pointing out at the areas to be relooked and that how efficiency can be
created in the supply chain of the company.
There are different suppliers in the manufacturing of a shoe article out of those many 1 is leather
manufacturer. Explaining it in simplest diagram of supply chain is providing customer with a
product from supplier after adding value at different stages.

Supplier/Provider Recipient/Customer

e.g., leather e.g., a shoe purchaser

manufacturer

An important thing to note down here is that there can different number of supply chains for
different products of the same company. If the company is making 100 different products, there
will be 100 different supply chains that company will be carrying.

A diagram below mentioned will give a clear idea on how supply chain management works for a
shoebox.

5
Farmer
D
t
R
g
d
A
C
n
la
P
o
is
c
e
p
&
h
v
f
r
u
k
m
b
y
Q
H SCM

So the above mentioned diagram gives us an idea of how supply chain on a whole works in a
footwear industry. It starts from decision making level i.e., the corporate level of the company
which includes major decision making. Where to open a new branch? Which supplier to work
with? How many articles to be launched this summer/winter season? All these and many
questions are answered at this step in the company’s headquarter. Next is cross functional
approach, this includes different departments and people from different functions working
together in order to add value in the product. Ultimately, strengthening the company’s supply
chain. Next step is value addition, this could be in any form i.e., cost, time, quality, quantity,
customer satisfaction. In a single pair of shoe article till it reaches the end customer every step
should add value in it. Working in a company give rise to conflicts either they are inter
department or intra department or outside department, they should be resolved on the first hand
without denting the company from its impact. Working in fashion industry means rapid change
in demand and ever changing environment so in order to compete a company like shoebox has to
plan all the uncertainties and possible backup plans. This is how the supply chain management
works with reference to shoebox a footwear company.

Below is drawn another diagram of supply chain management of a manufacturing company i.e.,
shoebox

Upstream

2nd Tier 1st Tier

Leather
Shoebox

6
1st Tier
Downstream

2nd Tier 3rd Tier

In the above mentioned diagram, there are mentioned the upstream and downstream for a shoe
manufacturing firm named shoebox. Shoebox manufactures shoes of different kinds and
categories. We have selected one of them called Moccs. So, in this article leather for outer
covering, paint to give it different colors and piece of hardened cloth for internal covering along
with other essential materials are used. In diagram we have taken 3 of them and went upstream
finding source of them. Leather came from animal’s skin which are found in different cattle and
sheep farms under a farmer’s ownership. Similarly different colors combinations are being made
by the chemical processor which comes up as paint for mocc. A piece of cloth is also stitched on
the inside of the mocc whose origin is cotton which is refined and transformed into clothing.

After discussing upstream, downstream is pretty simple in case of shoebox because the company
has outsourced its logistics department to NCCS cargo. The company transports the articles from
the company’s warehouse to the given retail stores and hence the product reaches the end
customer.

Products (shoes)

Information and Planning

7
8
Section 5: Core processes or Levels of Supply Chain

1. Plan: Determination of important documents, information which are needed to support

the supply chain.
2. Source: shoebox focuses heavily on its relationship to the outsourcing companies both
local as well as international and also on its suppliers needed for bar coding.
3. Make: The manufacturing process is outsourced to two kinds of vendors. Local (Gujrat,
Sialkot) and international (China, Brazil).
4. Deliver: Marking of retail stores is being done initially and then accordingly products are
dispatched through NCCS (outsourced).
5. Return: Defective products are shipped from retail stores to warehouse and then treated
on the basis of quantity defected.

9
Section 6: Supply Chain Manager
Supply chain manager manages 3 hubs which are supply, demand and logistics.

1. Supply Hub:

The supply chain manager has to maintain a good relationship with the supplier and get the
forecasted and purchase ordered inventory on time. The manager has to maintain a good
level of shoe inventory because the company neither wants to overfill the warehouse nor
went sold out in the earlier without having backup inventory.

2. Demand Hub:

Demand hub is also very important. The supply chain manager has to keep an eye on the
sales and forecast demand and to keep in touch with the supplier for the manufacturing and
timely delivery of that article. For example in our case of shoebox, the supply chain managers
keep an eye on the high sales retail stores and also stay in touch with the outsourced vendor in
order to produce a specific article of shoes which demanded highly by the end customer.
Inventory optimization is something which is similar in both supply and demand hub i.e., initial
products received at warehouse, backup inventory stored and reordered inventory received from
the vendor, at every point quantity of inventory should be optimized.

3. Logistics Hub:

In logistics hub, shoebox has outsourced its logistics to a vendor named NCCS. But the
supply chain manager keeps an eye on the timely dispatch and receiving of the products and that
too in delivered form with no damage. Rest of the optimizations i.e., route, KPI they are take
care of by the outsourcing firm.

10
 Section 7: Shoebox Value Chain

Shoebox infrastructure (acc,fin,scm,decision making)

Indirect
Value
Human Resource Management (recruit, train, develop)
Support Activity

Technology Development (R&D, product design)

Profit
Procurement (sole purchasing, vendor selection) Margin

Inbound Operations Outbound Marketing Service

Direct
Value (leather, (outsource, (Collect (Advertise, (Replace,
lace,ware samples) finish prod, sale, retail
Primary Activity

housing) customer
distribute) discount, e-
service)
commerce)

11
This diagram basically explains the value addition in product that shoebox is selling. That
addition in value is not bound to be only in cost, quality or quantity. As mentioned in the
diagram, there are some support activities which are not part of manufacturing process of shoe
article but at the same time they are adding value. For example right employee hiring is adding
value to shoe article ultimately, so HR department in its own playing a part and adding value. It
includes almost every department working in a company because they all are working for a
common goal of the organization. Other activities include, technological developments for
designing of shoes, procurement of soles, vendor selections, bar codings and accounting, finance
and supply chain department). Now come towards the primary and directly value addition
processes which the customers see and willing to pay for them. It includes purchasing of raw
materials for example leather, lace, cloth. Then outsourcing the production process and
collecting and checking quality of finished products, advertising the new articles and ultimately
delivering products to the retail stores. The sum of primary and secondary activities adds up to
give the organization its Profit Margin for which it is operating in a given environment.

12
 Section 8: Supply Chain Integration

Shoebox

Purchase, outsource, R&D, Marketing

Key Supplier Shoebox

Shoebox Key Customer

Key Supplier Shoebox Key Customer

Key Customer
Supplier’s supplier Key Supplier Shoebox

13
This diagram shows the integration of shoebox with its key suppliers and customers. The ideal
supply chain management integration works in a way that every stake holder is in line with every
other party involved. Because supply chain management does not believe in profiting of one
party only but it focuses on making the whole chain more effective and more efficient which
ultimately will create more customer satisfaction and more profit.

14
Section 9: Aligning strategy with system:
Innovation
Purchasing Material purchase of shoebox
(Soles) is highlight of company
innovation. Because their
supplier’s are technologically
advance and innovative in
design
Production R&D stays in collaboration
with production team in order
to produce competitive articles
Logistics Bar cods
Tracking and checking
Delivery/flexibility/quality Cost Leadership
Timeline of material In order to sell a
purchase to outsourced shoe product under
production order aligns Rs 1000, shoebox is
because of supplier’s high cost effective with
responsiveness its supplier
Inventories stays minimal Lessen inventories
(only backup) Increased worker
Due dates are highly productivity
important to be met
Dedicated contract carrier Low cost transport
NCCS to assure timely company
delivery Use volume
contracts
Minimize inventory
15
Shoebox’s strategy is a mix of what we have studied in the above mentioned topic. The mix of
strategies came out from shoebox only because of the tough competition in the market and to
have a unique selling proportion of the firm. The company sells shoes under Rs 1000 which
make it cost effective because not many brands out there in market are offering such price
bracket. Next in line is delivery/flexibility and quality. Despite having such articles of low
prices, company has a separate quality department which checks the products randomly on their
arrival in the warehouse. In fashion industry, innovation is something which companies cannot
survive without. Shoebox too, innovate its products by design mainly and by material used,
packing, outlook and customer service.

16
Section 10: Strategic, tactical & operational decision making
Decisio Strategic Tacti Operati
n Area cal onal
Transp Mode - Dispatc
ortatio selection hing
n (Roadwa
ys) Match Mismatch
Invento Location Safet Order
ries (Wareho y Filing
use) Stock
levels
(Bac Mismatch Match
kup)
Order Order - Processi
Process Entry ng and
ing filling
back
orders
Purcha Relations Contr Expedit
sing hip with actin ing
supplier g
(For
soles)
Wareh Handling Spac Order
ousing equipme e picking,
nt, bar utiliz restocki
coding ation ng
Facility Number, - -
locatio size,
n location
of
warehous
e

Choosing the right supply chain strategy

Functional products- Innovative products-

Predictable demand Unpredictable

demand

Efficient Supply Chain

17
Responsive Supply Chain
 Note: Due to presence in fashion industry and focusing more on innovation in design with
unpredictable sales of one article as compared to the other, shoebox and the footwear industry
lies in INNOVATIVE INDUSTRY.

18
Section 11: Understanding the Supply Chain: Cost-Responsiveness
Efficient Frontier
hig
h
Responsiveness

low

low high
Cost

19
Keeping in mind the target population of shoebox and the overall trend of purchasing in the
footwear industry we can say that the customers are highly cost responsive. Most of the people
while buying a shoe look up to the price brackets of their range. In this regard shoebox is doing a
wonderful job because geographically Pakistan encompasses a huge chunk of its population as
middle class families. Shoebox targets them by providing its products within limits of a customer
who is cost reactive or responsive.

20
Section 12: Position in Supply Chain

Engineer to order

Buy to order

Make to order

21
Assemble to order

Make to Stock
C
h
S
u
i
l
p
b
e
m
o
t
s
x
r
Ship to Stock
Shoebox in this regard to position in supply chain lies in the Buy to Order category. As we know
that shoebox outsources its production of goods, so in case of any order it buys from the vendor,
warehouse handling, bar coding and dispatched the product.

22
Section 13: Information Flow Chart

Design Vendor’s raw Sample

information material

Raw material
Production order Approval

Manufacturing Logistics Delivered to

warehouse

Bar coding
Retail Store Logistics

23
 Manufacturing
Process
Section 14: Material Flow Chart
Designing (7 days)
Leather
7 days
Shoe lasting department (15 days)
Fabric

Stamping and Sewing (7 days)

Soles

Decoration (3 days)

Color
Paints
Finishing (4 days)

Foam Dispatch (1 day)

1 day
1 day Shoebox warehouse
Retail Stores
Bar coding (2 days)

End
Customers

24
Section 15: Value stream mapping

Release manager

Supplier Information Flow Client

Ex Dynamics Excel

Product Flow

Process 1 Process 2 Process 3 Process 4 Process 5

10 Team 1 Team 2 Team 3 Team 4 Team 5
7 6 2 4

PT 2 days PT 3 days PT 1 day 2 days 2 days

Prod LT = 29 D
Time Ladder
Process T= 10 D

10 7 6 2 4
2 3 1 2 2

25
Value stream mapping is very important in determining the production lead time and processing
time difference. It tells us about how much time the product is being manufactured and how
much it has not been under any kind of manufacturing process. Coming to the firm under
consideration which is shoebox, it took around 29 days in total for a product to be produced
whereas only 10 days are the process time in which the product has been under any sort of
manufacturing work whereas 19 days is the lead time which is excessive and it has to be reduced
in order to attain efficiency and more productivity in the market.

26
Section 16: Process Activity Mapping

S Step Value
No.
1 Leather received VA
2 Stored in warehouse NVA
3 Moved to production area NNVA
4 Put in dye NNVA
5 Desired shape achieved VA
6 Dry process NNVA
7 Moved to stitching department NNVA
8 Stitching and assembling leather with fabric, plastic, rubber and form VA
9 Work in process product moved to decoration department NNVA
10 Soles assembled and decoration material assembled VA
11 Shoe article Moved to finishing area NNVA
12 Lacquer and chemical coating VA
13 Moved to packing area NNVA
14 Packing in 12 pairs each NVA
15 Stored in warehouse NVA
16 Dispatched VA

27
In this mapping, we have discussed and categorized different activities that are involved in the
manufacturing of a shoe article. Value added activities are those for which the customer is
willing to pay the price whereas Necessary and Non value added activities are those which are
non value added from customer’s point of view but they are necessary as well because without
them product won’t be manufactured and shipped to the customer. Now, Non Value added
activities are those on which work can be done and they can be eliminated because these are the
activities for which the customer is not willing to pay but they are incurring a cost and also time.

In the given example of shoebox’s production of shoes, material is first purchased and received
at the warehouse and then goes through different steps of manufacturing which are listed above
as per their activity categorization.

28
 Section 17: Order fulfillment mapping

Process Send Receiv Outline Productio Purchas Receiv Vendor Goods Materia Rec
stage orde e new productio n and e parts e parts manufacturin shipped l eive
r order n plan negotiatio g to handlin deli
n warehous g very
e
Department
involved
Customer
Sales office
Production
Purchase
and Vendor
Goods
inwards
Warehousin
g
Dispatching

29
In this order fulfillment mapping, an order is being placed and then company take charge of that
order and have to fulfill the requirements of the order. In regard to shoebox it takes a total of
around 7 weeks to deliver an order which involves a mix of manufacturing along with
outsourcing. After the production is completed products are gathered at warehouse, bar coding is
done there and then dispatched to the mentioned location.

30
 Section 18: Pipeline mapping

45 25 14 7 5 3
30
Tr
an
Stit Asse Lac Bar sp
chi mbl Sole qer codin or
ng y s u g (4) t
Dye In store
Comm (2)
28 15 13 6
odity 35 End
market User

Sho
Stit In
e Sole Ch Wareh
materi che trans
add em ouse
al d it
ed ical
s
Stam
Assem Logis
ping Insole
bly Shoe tics
and &
depart Finis manufactu Provi
Shoe sewi decor Retailer
ment hing rer der
Lasting ng ation

31
In the above mentioned mapping which is pipeline mapping, it actually shows that how much
material is present in the pipeline. In simple words, if now the industry faces lockdown then how
much can the company produce in terms of days. Talking about shoebox included in footwear
industry, raw materials go through different processes and the number days kept on decreasing
and ultimately reaching to the end customer.

32
Section 19: Conclusive Analysis:
After studying, analyzing, meeting with officials of the company and specifically after applying
supply chain management tools, we are of the view that shoebox is having a little more lead time
which could have been compressed. It is important to point out the critical area where work can
be done and it is the delivery of the products from the outsourcing company which more often
took 7-10 days more than the expected time of delivery. This adds a lot of pressure on the
downstream supply chain of the company. This issue can be addressed by communicating with
the outsourcing company as mentioned mainly in Gujrat and Sialkot and internationally in China.
However, in extreme case the company might switch to other suppliers as well because footwear
industry in Pakistan is a competitive one and manufacturers are on their toes thriving to get more
chunk of the market.

33
Section 20: Minutes of the meeting:
In total so far 3 online meetings have been conducted with different officials from shoebox and
relevant information has been collected accordingly. Minutes of three meetings are being
mentioned below.

Meeting 1. (22-04-2021)
1st meeting was conducted with Mr Wajid Rehman from shoebox, currently working in supply
chain department. Whole group was present in this meeting. A draft of requirements about
projects along with the introduction was presented to him. He thoroughly explained the firm’s
organization and talked about his experiences as well. Relevant information was voice recorded
as well as wrote on paper by participants. Mr Wajid Rehman provided us with contact of Mr Abu
Bakar who will be dealing with us in our project. Agenda for next meeting was to study footwear
industry on whole and go through the course material and requirements of project in order to ask
for relevant information.

Meeting 2. (25-05-2021)
2nd meeting happen a couple of days later. All participants were present in the meeting. It started
off with an insight introduction of whole supply chain activities of Shoebox along with other
relevant information. Group members participated in the meeting by asking questions as per their
understanding and they were addressed by Mr Abu Bakar. Relevant information was noted
down. Agenda for next meeting was set to make a draft of project and see if there is any further
information and corrections are required to arrange another meeting.

Meeting 3. (02-05-2021)
3rd meeting held a week later. It started off with the empty spaces and the loop holes pointed out
in the project during the week. Written queries were asked from the official and they were
answered accordingly.

During the space of these meetings, several group meetings were held and related matters were
discussed and work has been done on possible solutions.

34