2010

1.5 bio
The single largest by Engro In the history of Pakistan
666
USD worth of investment,

& a market cap of USD Mio

the
tenacityto grow
1957
Esso/Mobil JV
discovers Mari
1964
Gas
GOP &
Esso/Mobil sign
agreement for
1968
fertilizer Plant
Production starts
with the single 1978
largest Company 1991
investment at renamed Exxon Divests
that time- EXXON First ever Employee
USD 43 mio Chemical Buy out in
Pakistan Pakistan’s History
Limited 75% shares bought

roots
our by employees
Engro
 2010

The largest
A premier Engro Vopak Engro Polymer Aiming to
importer of The only FMCG
fertilizer Terminal. formerly known as Leading set up the
phosphates in Engro Corp, Exploring
manufacturing Handling a Asahi is the sole global first
and potash has launched alternative
and marketing range of producer of PVC automation Independent
fertilizers in some of the energy
company with chemicals & resin, plays a business, Power
Pakistan with most successful solution
products that LPG since pivotal role in providing Project for
a vision to brands in (hydro
focus on over 10 years, ensuring the process & Engro with
expand into Pakistan, is now /solar) for
balanced crop with an sustainability of the control a 220 MW
new and poised for global Pakistan
nutrition and immaculate domestic PVC solutions plant at
profitable expansion
increased yield safety record industry. Qadirpur
trading avenue

1991 1997 1997 2003 2003 2005 2006 2008

the
tenacityto grow
A five years’ trek to success
USD 250 million
 Sukkur Plant Commissioned

2006 Olper’s-EFL flaghip brand launched

Olper’s Cream & Olwell follow closely

2007 Sahiwal Plant Commissioned

Tarang-Tea whitener launch creates ripples
2nd Largest Milk Collection infrastructure deployed

2008 Clinches the 2nd Position in UHT Milk Industry

Model Dairy Farm dream realized

2009 Market Leadership attained in UHT Milk

Owsum Flavored milk, excites the kids segment
Engro Foods ventures into ice cream with Omore launch

2010
Cracks the Powder Category with Tarang Powder
Breaks into Juices & Drinks Category with Olfrute
GBU takes off with a promising start
Muridke Rice Plant operational
in
retrospect
Elevating Consumer Delight world wide

bindingfactor
the
 All eyes fixed on 2014 to hit the
PKR 60 billion mark
2010
PKR 21 bio Est.

2009
PKR 14 bio

2008
PKR 8 bio

2007
PKR 4 bio
2006
PKR 1.5 bio
 integrity innovation impact
Football
Outbreaks Birthdays
Music Passion Food Diversity Challenge
Open-door
Speed Ambition Optimism

what we are
Madeof
 Engro Foods is almost
4000 peoplestrong
270 MBA’s work at EFL,48 from IBA & LUMS

60 Engineers strengthen EFL

09 Chartered Accountants are part of EFL

31 Foreign grads are in EFL team

Almost 90% of senior management have experience at blue chip companies
Our people have gone to INSEAD & STANFORD for training

36 people have successfully completed a Diploma course via strategic alliance between
Forman Christian College & EFL
‘Best Work Place -Pakistani Organization Award- 2 years in a row by PSHRM
2008-2009

what we
treasure
the
brand-side story
 150

100

50

0
2006 2007 2008 2009 2010 (e)

Olper’s 2006 2007 2008 2009 2010

Key Features
Vol(mio) 36 72 102 126 140
Val(PKR Bio) 1.4 2.8 4.7 6.5 7.8
Targeting the 25-35 year old SEC A-B
MKT.Share % 8% 16% 22% 27% 31% Housewife with campaigns based on
optimism, and a complete life and all-
All purpose Milk Market
purpose functional values
Category Brands Share

Milkpak 43%

Olper’s 31%

Haleeb & DQ 12%

Good Milk 7%

Nurpur 3%

Subah Khair Zindagi!

 200
150
100
50
0
Year 2007 2008 2009 2010 e
Vol (mio) 5 47 115 163
Val (PKR bio) 0.25 2 6 9.2
Mkt share/STC 21% 63% 63% 60% Key Features
Targeting the 25-35 year old SEC-B/C tea
Tea Market drinker with glamorous filmi campaigns
Whitener Share featuring their favorite movie stars, and
Category sensory campaigns promotion Tarang’s
Tarang 60%
functional USP

Teamax 27% Tarang Powder has recently been launched

Everyday 11%

Others 2%

Chai Ka Sahi Jor

 25
20 2009
15 2010
2011
10
5
0
Vol (mio ltrs) 6 12 21
Val (PKR bio) 0.7 1.5 3.1
Mkt. Share 11% 17% 25%

Key Features
Targeting the 5-80 (all) year old SEC-A-B ice
cream lover with rapid introductions of
formats and flavors, happy, fun and colorful
campaigns

‘Art of Happiness’ for people from the happy scoop of thought!

 3.5

3
Volume - Million Litres

2.5

2 2009
1.5 3 2010
2011
1 2
0.5 0.905
0
2009 2010 2011

Volume Share 2010 Outlook

Pakola Nurpur Owsum OoLaLa Others

8% 3% 2%

12%

75%

‘For the wonderful world of kids

Olfrute Volume Outlook 2010 1.3 mio ltrs

Olfrute Value Outlook 2010 Rs. 81 mio

Olfrute Market Share Outlook 2010 2%

7.7, 13%
1.3, 2%
Nestle
Shezan
14, Olfrute
23% 37, 62% Others

JN Category Outlook 2010

‘For a fruitastic life

‘High calcium, low fat milk;’ so you’re unstoppable
 Category Volume 19 mio
Category Value PKR 7 bn

‘Olper’ Cream; because life is a dessert”

 TRADE ENVIRONMENT IN PAKISTAN – DAIRY COVERAGE
Total Urban
UHT Handlers
Universe
151,757 Outlets
272,459 Outlets

MARKETS

URBAN MARKETS – 472 Towns… Urban – 200… Semi Urban – 272

RURAL MARKETS – 40,000 Villages

RETAIL UNIVERSE
• Urban – 272,459
• Rural – 400,000
• Total Urban UHT Handlers – 151,757
• UHT Handlers Top 200 Towns - 138,139

RETAIL SEGMENTS Total / UHT Handlers

Top End Retail – 554 / 519 (0.34% of UHT Handlers)

UHT Handlers in EFL COVERAGE
Top 200 Towns 115,335 Outlets General Stores – 150,864 / 119,681 (78.9% of UHT Handlers)
138,139 Outlets (76% of Handlers)
Kiryana Stores – 35,029 / 20,104 (13.25% of UHT Handlers)
Haleeb – 54%
Bakeries – 4,060 / 3,272 (2.16% of UHT Handlers)
Nestle’ – 70%
Others – 81,952 / 8,181 (5.39% of UHT Handlers)

Source: Nielsen
the
Back bone that supports us
• Number of operational Milk Collection Centers •“To be the largest, most efficient farm in the world”
(MCC) = 700+ •Location is Nara, Sukkur
• Number of Area Offices = 14 •HERD SIZE: 3000 Australian Cows
• Territory Coverage •Animals
– South Zone : Sanghar to Ghotki = 450 km •Pure-bred Jersey
– Central Zone : Sadiqabad to Duniyapur = 300km •Cross-bred Jersey
– North Zone : Mian Channu to Chishtian = 250 km •Pure-bred Holstein
•Strategic Advantage
• Agri Services: Teaching/ guiding /Educating the •Be the beacon , guide others into corp farming
common farmer of Pakistan
•Business Extension (Meat processing)
• In-bound Dedicated Vehicles: 250+
•Control over raw material supplies
•Value Added Products
•Export Market Potential
Our Business Partners
Creative

Media

Marketing
Research

Activation & CR & PR

Human Resources HRSG Engage HR (Paul Kiezer) TEI Plantinum

Supply Chain IFF Wolfe

IT Orix IBM
 SALMAN GOHEER
My Introduction
Graduated in 1998 as Chemical Engg

Started as Trainee Engg in PTA Plant

With Unilever from 1999 to 2007

Manufacturing, Manufacturing Excellence, Planning

With Engro Foods since Aug 2007

Planning, Purchasing, Customer Services

Head of SC (Ice cream and Dairy )

I am a very responsible Person

Every time something goes wrong
I AM HELD RESPONSIBLE
• Supply chain
:concept and practical issues

Salman Goheer
What Is a Business ???

PROCURE ADD SELL

VALUE

EARN
PROFIT
 Flows of Information and Material
Demand Information/Cash
Inventory, capacity, lead time buffers

Ingredients & Manufacturer Manufacturer Retailer Retail store Consumers

packaging production distribution distribution (shelf + back
suppliers lines center center room)

Ingredients & Manufacturer Manufacturer Retailer Retail store Consumers

Products
packaging
suppliers
production
lines
distribution
center
distribution
Wholesaler
center
(shelf + back
room)

Wholesaler
Typical
Supply chain
organizational
Organization
structure

TECHNICAL
SUPPLY CHAIN
COMMERCIAL

FINANCE MANUFACTURING

INF. TECHO QA & DEVELOPMENT

PLANNING PLANNING

BUYING BUYING

LOGISTICS LOGISTICS
What does supply chain do

Speed to market

Quality
Cost
Innovation
A simple business model……. Or is it ….

Spoon/secondry pckging
Packaging Materials = 8
Raw Materials = 14
Processes = 10

Lid/Cup

Raw Materials
Complexity only increases……

Raw & Pack. Materials > 300

Suppliers > 100

Stock Keeping Units > 80
3 Manufacturing sites
5 distribution hubs
Lead times from 1 day to 90 days
Innovations approximately 10/year
 Flows of Information and Material
Demand Information/Cash

Ingredients & Manufacturer Manufacturer Retailer Retail store Consumers

packaging production distribution distribution (shelf + back
suppliers lines center center room)

Ingredients & Manufacturer Manufacturer Retailer Retail store Consumers

Products
packaging
suppliers
production
lines
distribution
center
distribution
Wholesaler
center
(shelf + back
room)

Wholesaler
The modern day supply chain

SUPPLY CHAIN

CONSUMERS
CUSTOMERS
PLAN
SUPPLY CHAIN
SOURCE MAKE DELIVER
SUPPLIERS

EXTENDED SUPPLY CHAIN

The modern day supply chain

SUPPLY CHAIN

CONSUMERS
CUSTOMERS
PLAN
SUPPLY CHAIN
SOURCE MAKE DELIVER
SUPPLIERS

EXTENDED SUPPLY CHAIN

 The complete business Model

Leadership & Strategy

Brand
Development
Channel and Customer
Human Resource

Development

Finance
Supply Chain

Information Technology
 The complete Business Model
Leadership & Strategy

Supply
planning Plan Demand
planning

Supplier Customer service

Human Resources

Processing
management management

Finance
Source Make Deliver
Inbound Packing Distribution
logistics management

Innovation Performance
introduction Supply Chain technology Improvement

Information Technology
Once you have the organization in place,
what do you do next

Devise a supply chain strategy, based on

SKU prioritization
Selection Criteria

– Gross Margin
– SKU Contribution
– Duration
– Strategic Importance
Turnover Contribution in % terms
Region
1 2 3 4

100%
4
90% 12 %
No matter
80% 11 %
3 30% 4
what

70%

60%
42 %2
50%
Must do

40%
50%
3
30%

20%
36 %1 12% If I can
10%
Are you
8% 2
1 sure
0%
Sum of No of SKU Sum of Turnover/SKU

Data
Implementation of strategy

Most of the times the strategy is fine, it’s the

implementation which is weak!

How would you

do it…………
Establish KPIs to drive the desired behaviors

PLAN SOURCE MAKE DELIVER

•Service • Change
level • Shipping
over times frequency
targets •Supplier
• Output • Service
•Safety ratings
reliability level targets
stock •Lead
• Quality • Minimum
•Review of times
parameters order
MRP •Order
• Plant quantity
• Inventory multiples
utilization
accuracy
Enablers
IT
• Reliability (Sitting in the head office, planning for a launch in Faisalabad)
• Speed (Sold yesterday, replenish today)
• Real time (Daily secondary sales information at our fingertips)

Safety
• Community and employee care
• Motivational

Working Environment
• Quality of resource
• Their retention
• Productivity

External Orientation
• Change management
• External benchmarking
 Concluding remarks

“In a recent Conference Board survey,

70% of
CEOs believed that their supply chain
performance was below average.”
So good news, on average, your supply
chain
is better than you think!
Concluding remarks
Concluding remarks
 Concluding remarks

Approximately how many athletes were there in the 2010

Canadian Ironman?
 Concluding remarks

Approximately how many athletes were there in the 2010

Canadian Ironman?
Concluding remarks
Concluding remarks
Concluding remarks
Questions
Plan - Supply planning
Inventory
Service
holding costs
levels
Pipe line
(CCFOT) Innovation
Losses
Pipeline
Short and Delivery
Long term
Capacity
planning

S&OP Process
???
Supplier

Distribution/L Factory
Retailer Distributor ogistics
The Store

Bird flue example

 Inventory……a necessary evil

Forecasting inefficiency

Dklfjladl
Sldfldf
Slfls
Dlf
Dfdf
Dfdf
Dfd
Inventory……a necessary evil

Forecasting inefficiency

Manufacturing inefficiency

Df
Dfd
Dfd
Dfd
dfd
Inventory……a necessary evil

Forecasting inefficiency

Manufacturing inefficiency

Procurement inefficiency
D
D
D
d
Inventory……a necessary evil

Forecasting inefficiency

Manufacturing inefficiency

Procurement inefficiency

Supplier’s inefficiency
Plan - Demand planning
Milky choclate

Corp Plan
16,000

14,000

12,000

10,000

8,000
Corp Plan

6,000

4,000

2,000

-
Jan Feb Mar Apr May June
Plan - Demand planning
Milky choclate
90,000

80,000

70,000

60,000

50,000
Corp Plan
OPM
40,000

30,000

20,000

10,000

-
Jan Feb Mar Apr May June
Plan - Demand planning
Milky choclate
100,000

90,000

80,000

70,000

60,000

Corp Plan
50,000
OPM
Sales
40,000

30,000

20,000

10,000

-
Jan Feb Mar Apr May June
Plan - Demand planning
Lick a flavour 2
Corp Plan
80,000

70,000

60,000

50,000

40,000
Corp Plan

30,000

20,000

10,000

-
Jan Feb Mar April May June
Plan - Demand planning
Lick a flavour 2
80,000

70,000

60,000

50,000

40,000 Corp Plan

OPM

30,000

20,000

10,000

-
Jan Feb Mar April May June
Plan - Demand planning
Lick a flavour 2
80,000

70,000

60,000

50,000

Corp Plan
40,000
OPM
Sales

30,000

20,000

10,000

-
Jan Feb Mar April May June
 Plan - Demand planning

• Understand demand & communicate it timely throughout the

supply chain so that customer needs can be better met
• The objective of Demand Planning is to forecast:
– What products are wanted
– When they are required and
– How many of those products are required

Product
What

Geography Time
Where When
 Plan - Demand planning

• Understand demand & communicate it timely throughout the

supply chain so that customer needs can be better met
• The objective of Demand Planning is to forecast:
– What products are wanted
– When they are required and
– How many of those products are required

Product
What

Geography Time
Where When
Source - Some basic facts
Materials Spend (How they do) Material Management (What they do)
RM
32%
NPI
48% RM Imp, 391

PM Loc, 643

PM
RM Loc, 149
20%

Supplier Management (Who they do it with) PM Imp, 75

PM Loc, 56

PM Imp, 23

RM Loc, 86
RM Imp, 253
Source - Some basic facts….World is now Volatile
Source - Some basic facts…….and complex
Source - Some basic facts
Source - Some basic facts
 Return
Source - Some basic facts
Make – Foot print

• TPM • Concept of Zeros

• Time compression •Zero loss
• Out put reliability •Zero accident
•Less is Bad •Zero down time
•More is also Bad

•Flexible
•Responsive
•Optimized operations
Deliver
One – One window
Customer operation
Services Team
Moving away from fragmented resources with multiple
interfaces
 EFL CSD at a Glance
Ambient Chain Cold Chain

2 Dairy Processing & Packaging Plants 1 Ice Cream Manufacturing Facility

36 dedicated 50 ft vehicles 12 Dedicated 40 ft Vehicles

3 Distribution Centres 3 Cold Stores

Sahiwal, Sukker, Islamabad Khi,Lahore & Islamabad

31 dedicated 20 & 9ton vehicles 74 Dedicated Eutectic/Thermoking Vans

300 Distributors Direct selling to shops/ 6 distributors

Daily orders to be serviced in 24-96 hr Daily orders to be serviced by 10 am

bracket next morning
 EFL CSD at a Glance

2006 2007 2008 2009 2010 2008 2009 2010

Warehouse Avg Transit 5.2 3.4 2.5
and Transit 0.5% 0.35% 0.25% 0.14% 0.11% Days
Loss
Handling cost 0.12 0.14 0.14
Diesel Cost 54 60 72

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