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SUPPLY CHAIN MANAGEMENT OF AL-GHAZI TRACTORS LIMITED (AGTL)DERA GHAZI KHAN
Presented by: BZU D.G.Khan, Pakistan
INTRODUCTION OF AGTL AGTL is recognized for the “best corporate
performance”. Al-ghazi Tractors limited was incorporated on1. June 26, 1983 at Lahore.2. started operations in September 1, 1983. 3. started its production at D.G.Khan auxiliary plant in
February 20, 1985.4. privatized on December 9, 1991 and taken over by
a foreign investor Al-Futtaim of Dubai.5. market leader of tractors for the years 1994, 1995
and 1996 by the Karachi Stock Exchange.
VISION STATEMENT“ To make AGTL a symbol of success” This sets the directions for each
employee to achieve the company’s mission.
Mission Statement“ our enduring competitive edge is the
quality of our tractors”
ORGANIZATIONAL STRUCTUREThe organizational structure of Al-Ghazi
Tractors limited is split into 5 functional areas;
Personnel and administration Finance Material management Plant and production Marketing
SUPPLY CHAIN
A supply chain is a system of1. organizations2. people3. technology 4. activities 5. information and6. resources involved in moving a product or
service from supplier to customer.
SUPPLY CHAIN MANAGEMENT Supply chain management (SCM) improves the
ways of finding the raw components company needs to make product or service and deliver it to customers.
Supplier Manufacturer Distributor Retailer Customer
UpstreamDownstream
A. SUPPLY CHAIN PLANNING Starts with forecast of demand for
the coming year. Forecasting at Al-Ghazi Tractors Ltd is
done before 6 months. Head Office, Karachi, sends production
schedule to the factory according to the number of bookings.
B. OTHER SCM COMPONENTS
SUPPLY CHAIN STRATEGY
Efficiency AGTL has focus on cost reduction,
achieved cost efficiency by1. using slow and inexpensive modes of
transportation 2. economies of scale in production3. About 98 % of tractors are sold
through Agriculture development Bank of Pakistan
SUPPLY CHAIN STRATEGY
Responsiveness AGTL tends to transfer the
responsiveness to the dealer and distributor, allowing them to face the demand uncertainty.
This in return allows the manufacturer to be more efficient.
KEY DRIVERS OF SUPPLY CHAIN
Competitive Strategy
Supply Chain Strategy
Efficiency Responsiveness
Facilities Inventory Transportation
Information
Supply chain structure
Cross Functional Drivers
Sourcing Pricing
Logistical Drivers
SUPPLY CHAIN DRIVERS IN AGTLFramework for Structuring Drivers:
Competitive strategy
Supply chain strategy
Inventory Facility Information
ADBP
Responsiveness
Dealers Network
Efficiency
AGTLSupply Chain Structures
Supply Chain Drivers
1….FACILITIES Facility means location which involves
the commitment of resources to long range plans.
Locations take on even greater significance because of
1. basic strategy for assessing markets2. impact on revenue, cost and service
level to customers and clients
LOCATION OF AL-GHAZI TRACTORS LTD The location of Al-Ghazi Tractors Ltd. is
about 12 kilometers on main Sakhi Sarwar Road from Dera Ghazi khan in the South Punjab. Plant is located at about 30 acres.
AGTL select D.G.Khan because Govt. gave option to AGTL to select either D.G.Khan or Khushab.
FACTORS OF SELECTING D.G.KHAN LOCATION
TAX FREE ZONE FAVORABLE LABOR CLIMATE TAXES AND REAL ESTATE COSTS CONSTRUCTION COST PROXIMITY TO MARKETS AVAILABILITY OF UTILITIES
AGTL manufactured 115 tractors/8 hours shift
The plant is capable of providing +30,000 tractors per annum in single shift.
350,000 tractors manufactured by AGTL.
In year 1999-2000 , the firm produced 18000+ tractors utilizing over time to meet the orders because avg capacity is 15,000.
METRICS OF FACILITY(A) CAPACITY
CAPACITY Al-Ghazi Tractors limited is 1. Using effective capacity2. The plant operates on high efficiency.
(B)PRODUCTION
The avg. production level is 15,000 tractors. Al-Ghazi Tractors Limited is now having
50% market share. No.of employees 388 employess Production=205 employees28 managers24 Executive153 others
(C) PRODUCT VARIETY
Tractors Implements e.g Cultivators,Disc
Harrow.Rotavator Generators Mechanized farming e.g Irrigation soln.
MODELS
480’s 640 640’s Ghazi NH 55-56 NH 60-56
PRODUCTION DATAYears Model
480-SModel 640
1993-94 3686 1861
1994-95 4400 2015
1995-96 4415 2202
1996-97 3841 1098
1997-98 5375 913
1998-99 10012 2188
1999-2000 16366 2059
2…INVENTORY MANAGEMENT IN AGTL
Order paid by ADBP
Forecast made by sales department
Production plan made by production department
Purchasing plan made by purchasing department
TYPES OF INVENTORY MANAGEMENT The inventory can be divided into two
broad categories. Raw Material Inventory. Finished Goods Inventory.
RAW MATERIAL Two broad categories come under the raw
material:a). IMPORTED MATERIAL:1. gear cases and2. Engine and the critical items from Italy,
Turkey. Percentage for imported material Model 480-S is 15% Model 640 is 24%
RAW MATERIALb). LOCAL MATERIAL: AGTL is having 359 vendors from all
over the Pakistan. No of workshops is 2000 No of parts dealers is 48
REORDER POINT Reorder point Whenever the material falls below 200
engines of the tractors, fax is sent to Head Office for more raw material.
LEAD TIME Lead-time is the time required for
receiving goods from the suppliers.
LEAD TIME Lead time for two types of suppliers.a). Local suppliers: Vendors from Lahore area have lead-time
of 10 days. Vendors from Karachi area have lead-time
of 30 days.b). Foreign suppliers: Lead-times for foreign vendors from Italy
and Turkey have usually 6 months.
METHODS FOR INVENTORY MANAGEMENT AT AGTL
ABC PLAN FOR INVENTORY AGTL uses ABC, system that is the process
of dividing items into three classes according to their Rs. Value and usage.
Category A: It includes the following items 1). Engine of tractor 2). Gear box of tractors 3). Imported items
METHODS FOR INVENTORY MANAGEMENT AT AGTL
Category B: It includes the following items 1). Items used in transmission 2). Nozzles 3). Tires Category C: It includes items, which are prepared
by local vendors.
INFORMATION Good information on supply and
demand can help improve product availability while decreasing inventories.
a). Information from customers: AGTL adopts Pull Strategy. To ensure
this,1. the firm maintains a documented
system to ensure the appropriate review of the customer’s orders.
INFORMATION FLOWAGTL
ADBP
Customer
Customer
Customer
Head Office, Karachi
Dealers
network
Over the
counter
DISTRIBUTION FUNCTION The distribution function is the part of the marketing
department and its activities are as follows:1-BOOKING OF TRACTORS:
There are two types of tractors bookings 1. against ADBP loans and 2. cash bookings
Registered with the company either by customers over the counter or through dealership network.
3. 90% booking’s are being entertained through dealers.
DISTRIBUTION FUNCTION
2-DELIVERY OF TRACTORS: Delivery scheduled is circulated to the
dealers by the way of intimation letters to customers.
DISTRIBUTION FUNCTION3-HANDLING OF PAYMENT: Cash basis: On cash basis then it is immediately delivered
to the customers. Loan order: For loan order, documents are passed on to
the payment handling section where the sets of documents are submitted to ADBP, bank drafts for its encashment in accordance with prevalent Agriculture Bank procedures.
DISTRIBUTION FUNCTION4-SERVICE FUNCTION: The function of this department is to 1. Provide after sales service2. perform cost savings functions
DISTRIBUTION FUNCTION
5-PARTS FUNCTIONS: The aim and objective of Parts
Department is to 1. ensure availability of all necessary imported and local parts.
DEALERS NETWORK
KARACHI GILGIT
Dealers Network from Karachi to Gilgit
ADBP
98%
Sales
throu
g
h ADBP
98% Sales through ADBP
SWOT ANALYSISRISKS
Presently bank loaning for tractors has been suspended.
Inconsistent government policies.
Sharp increases in costs of inputs;
withdrawal of all subsidies on the directives of IMF especially on electricity, gas etc
imposition of General Sales Tax on tractors
OPPORTUNITIES Smart irrigation
solutions through Drip Irrigation systems
Incentive schemes for tractor are likely sssssto be re-launched.
THANKS