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SUPPLY CHAIN OF SHAN PICKLE RANGE

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Faseeh Ullah

on 27 April 2014

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Transcript of SUPPLY CHAIN OF SHAN PICKLE RANGE

Vision which SFPL adhere is “A global food brand offering premium quality innovative products, which delight our consumers.”

Mission is “to reach every kitchen by diversifying into growing food categories through innovative, healthy & safe products for the ultimate delight of our consumers.”

Under this vision and mission SFPL has enhanced the shareholders value through sustainable growth, developing strategic relationship with its business partners and ensuring the safe work environment for its employees. 
ORGANIZATIONAL CHART
CURRENT PORTFOLIO
The current product portfolio of SFPL includes a wide spectrum of food categories, which are:
Plain spices
Recipe mix
GGP
Pickle and Chutney
Traditional and Contemporary Desserts
Pulses
Rice
Pink and traditional iodized salt
Ready to Cook
Ready to Eat
Instant noodles
Oriental recipe
Arabian special

SELECTED PRODUCT
Category: Pickle
Category growth: approx 5% local, 5% export
Types of pickle:
Mixed Pickle , Mango Pickle, Hyderabadi Pickle, Chilli Pickle
Lemon Pickle, Garlic Pickle , Ginger pickle, Carrot Pickle
Special Mango pickle , Gujrati pickle
South indian Hot pickle , Punjabi Mango mix pickle
Memoni mix pickle, Bengali Lemon pickle
Bengali Mango pickle , Mango Karela mix Pickle
Arabic pickle, Chinese Chili Pickle
SKUs: 300gm(glass bottle), 1Kg(jar), 200 and 500gm(pouches)

DEMAND PLANNING FOR PICKLE AT SFPL
No major TPs and CPs on this category due to low profit margins
Premium RM and packaging due to export requirements
Selling mode: push and pull both
Pull: distributors place orders
Push: sales team help sell more at GT, LMTs and IMTs

SFPL PROFILE
SUPPLY CHAIN OF SHAN PICKLE RANGE
GROUP MEMBERS:
TAHA BHATTI
FASEEH ULLAH
SATTAR AHMED
Core business: Manufacturing and Marketing of food brands
Employees: More than 1000 around the globe
Distribution network: approx 370 distributors across Pakistan, and 60 distributors globally
Head office: Karachi
Manufacturing facilities: Pakistan, UAE, KSA, UK and USA

VISION AND MISSION
SCM by Armtech business solutions to integrate supply chain with sales.

Helps in procuring RM and packaging material

RM mostly purchased on JIT, packaging material purchased on monthly targets basis(forecast).

MACHINE LOADING PLANNING
Depends on:
Production load: orders from export are on rise, which results in over time production to meet the local sales targets.
Nature of product: some type of pickle are very sticky in nature, there filling process is slow.

Workforce availability: number of labor available to deploy on different machines.

Boundary limits of machine: some machines are slow as compared to others, which slows down the peak production rate.

MANUFACTURING PROCESS
RAW MATERIALS:
1) Fruit or Vegetable
2) Acids
3) Flavorings
4) Colorants
5) Preservatives
6) Stabilizers

HARVESTING
PRESERVATION
FERMENTATION
PASTEURIZATION
REFRIGERATION
PROCESSING AND PACKING
Washed with water to remove salt
Cutting/chopping
Glass jars filling and packing
Liquid filling in the packing

PASTEURIZATION AND SEALING
Fear of exposure to air
Heated to an elevated temp.
Degassing of jar
Air tight with seal
MANUFACTURING
INTRO AND PLANNING
SUPPLY CHAIN
PROCEDURE/STEPS
Quality Inspection
Quantity Demand
Calculation/Planning & Negotiation
Purchasing
Production

DISTRIBUTION
LOCAL: PUSH


INTERNATIONAL: PULL
• DILSHA FEROZE
• AKHTAR PRIME
• KHURRAM ENTERPRISES
• F.S FOODS
• MAHBOOB TRADERS
• HUB PAK
• METRO SALT
• SPIRAL SALT
• VEGA TRADERS

LIST OF
SUPPLIERS
INT. DISTRIBUTORS
New Fine Foods
Moghul Foods USA
Best Foods USA
Goldcoast Distributor
Commerce International Barkat Cash & Carry New royal Distributor

SUPPLY CHAIN
WHAT IS INVENTORY
The term inventory means the value or amount of material or resource on hand.


Single largest asset on the balance sheet
Accounts for 40-60% of current assets
Helps to improve ROA & working capital

WHY INVENTORY
TYPES of Inventory Management @ Shan Foods
Raw material inventory(product and packaging):

RM include the raw material of all the product portfolio of the company, it includes spices, grains, seeds, sugar, salt and other related goods. Packaging material includes PET foils, Al foils, glass jars, PET jars, PET pouches, etc.
RM is stored at RM warehouse in Korangi Industrial Area which is separate from manufacturing facility. Its transferred to manufacturing facility on requirement basis.


Work in Process inventory(semi finished products)
This includes semi finished products and is stored in separate stores for each production area within the manufacturing facility. Example of this would be semi finished poly from filling section, waiting to be processed in cartoning section, or semi processed ginger garlic paste ready to be processed on filling line. This WIP inventory is stored in drums, and stacked on pallets.

FG inventory(final product ready to dispatch)
Each manufacturing facility has its own FG stores, whose size depends on the volumes of manufacturing of that category. FG cartons are stacked on pallets, and placed on high rise racks. As soon as the containers are loaded on dispatch decks, orders on the basis of pick up lists are drawn from racks using reach truck lifters.

MRO inventory (support in production)
This is the engineering inventory which is used in support of production; it includes spares of machinery, motors, PLCs, limit switches and other machine related parts.

Inventory method for PICKLE
Pickels at Shan Food’s product is generally maintained pull based inventory (JIT) keeping in view the handling and criticality of product storage

Inventory provides the following advantages;
Benefits
Volume purchase discounts
Economies of scale
Protection against uncertainties in demand & supply
Protection against uncertainty in supply chain
As far as benefits are concerned it also incurred some cost with it due to storage/handling i.e.;
Cost
Capital costs; interest
Facility costs; property tax, insurance, maint etc
Possession costs; pilferage, obsolescence
Large scrap losses
Setup expenses
Extensive transportation
Opportunity costs

The production department scheduled this product to near about 5 to 10 ton on daily basis keeping in view the demand of the product as Shan foods maintained majority of this product in just in time basis. Furthermore, this quantity rose to 15 ton on peak season (e.g. Ramzan, Eid, etc) to meet the gap between demand and supply.


MACHINE LOADING CAPACITY
The suggestion/opinion from our side is that sales department to review its sales on daily/weekly/monthly basis and make the results and compare it with the last few years. This analysis is then floated to concern department and to have comparison with inventory control i.e. either saving on JIT is actually loosing profit from responsiveness or vice versa.


Furthermore, Shan Foods generally distribute the product by self to local distributer. We suggest that Shan Food to have the comparison of this with the option of distributor itself picking up the finished products from Shan..

RECOMMENDATIONS
Shan has grown exponentially in the last couple of years from small scale spice manufacturing unit to Shan Foods Pvt. Ltd. with distributions in over 60 countries around the globe and a wide variety of products for its customers.
 
Shan Foods will soon become a polycentric Multinational company with its presence all over the globe.
Shan Foods is providing an indulging and delightful food experience that is JUST PERFECT!

For matching the pace of this growth with quality of their product, Shan Foods need to work more in saving their Supply chain costs, may be in logistics, raw material handling, capacity planning, etc.
 
One example could be of implementing VMI for cold storage raw material, hence saving carrying cost.
Another example could be implementing JIT or VMI for glass bottles which will save cost of breakage.
Another cost saving could be in procurement, where pricing of raw material supplied by local vendors is negotiated on each purchase. SPFL should work on SRM with its core suppliers and lock down the prices for bi annual buckets to prevent the effects of oil prices fluctuations on the price of its raw material.
Another cost saving could be in logistics, a small chuck of FG distribution is outsourced to TCS by SFPL, rest of distribution is being performed by SFPL itself to its distributors throughout the world and locally as well. In order to take advantage of economies of scale at specialize distribution, and prevent the cost of half empty containers, SFPL should outsource the distribution completely.


CONCLUSION
INVENTORY MANAGEMENT
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