production and operation management report

8/13/2019 Production and Operation Management Report

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PRODUCTION AND OPERATION MANAGEMENT REPORT 2013

TABLE OF CONTENTS

LETTER OF ACKNOWLEDGEMENT........................................................................... 4LETTER OF TRANSMITTAL....................................................................................... 5EXECUTIVE SUMMARY............................................................................................ 7THE GROUP IN BRIEF............................................................................................... 8STRUCTURE ............................................................................................................. 8VISION ..................................................................................................................... 9HISTORY ................................................................................................................ 10ICIIN PAKISTAN................................................................................................... 13MISSION STATEMENT............................................................................................ 15SWOTANALYSIS .................................................................................................. 15INTRODUCTION TO PAINT INDUSTRY..................................................................... 17ICIDULUX-THE MARKET LEADER....................................................................... 18CORE COMPETENCIES............................................................................................ 18PRODUCTION......................................................................................................... 20

PRODUCT LINEPRODUCT RANGEWATER BASED PAINTSOLVENT BASED PAINT

PRODUCTION PROCESS.......................................................................................... 21

DISPERSION SECTIONMIXING SECTIONCOLOR MATCH &QUALITY CONTROL SECTIONFILLING SECTIONERROR!BOOKMARK NOT DEFINED.

CAPACITY .............................................................................................................. 25FORECASTING ........................................................................................................ 25

QUALITATIVE APPROACHERROR!BOOKMARK NOT DEFINED.QUANTITATIVE APPROACHDEMAND PATTERN

INVENTORY &MATERIAL MANAGEMENT............................................................. 26USE OF INVENTORYTYPES OF INVENTORYINVENTORY MANAGEMENT AT ICIINVENTORY CONTROL &RECORDS IN ICIINVENTORY INSPECTIONRELATIONSHIP WITH SUPPLIER


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PROCUREMENT DEPARTMENT............................................................................... 28

DISTRIBUTION SYSTEM.......................................................................................... 30TOTAL QUALITY MANAGEMENT............................................................................ 30ISOCERTIFICATIONS............................................................................................. 32ISO9000ERROR!BOOKMARK NOT DEFINED.

ISO9001ISO14001MRP2CLASS A

CONCLUSION ......................................................................................................... 35


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EXECUTIVE SUMMARY

This report covers the production and operations management system of the ICI PakistanLtd. This report covers the production process, procurement and distribution strategy,core competencies, inventory management, total quality management and forecastingmethods and practices of ICI Pakistan Ltd. The findings of the research have beensummarized in the conclusion section on the analysis of the whole operationsmanagement system of ICI Pakistan Ltd.

ICI started operation in Pakistan 1964, its manufacturing plant for paints Business

situated at 346 Ferozepur Road, Lahore. Now, they have corporate offices, regionaloffices and warehouses in almost every district of Pakistan. The plant operates at worldstandards of safety, environmental care, product quality and process efficiency.

ICI is the market leader in the Paint Industry of Pakistan as well as a renowned name inthe pharmaceutical industry but the company also maintains its competitive edge byvirtue of being a local manufacturer and major supplier for the domestic Polyester fiberand Terephthalic Acid (PTA) to industries with short delivery, consistent quality andexcellent customer service.

Purified Terephthalic Acid (PTA) is an essential raw material for Pakistans textile and

PET packaging industries and forms the backbone of the polyester chain, includingPolyester Staple Fibre, Filament Yarn and PET (bottle grade) resin.

ICI Pakistan Ltd operates with quality standards and always tries to remain competent byproviding optimum quality of products and services to its customers and building longterm relationships with the suppliers, together to grow and prosper making the countryand the society to grow side by side as well. Its fully automated plant makes the qualityof the product more reliable and the end product is surely up to the specifications

requirements. The production plant undergoes continuous improvement processes tomaximize the efficiencies, optimize the use of resources and minimize the waste andloses.


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THE GROUP IN BRIEF

The ICI Group is one of the largest specialty products, coatings and materials companies.

ICI has over 50,000 products more than 200 manufacturing sites and offices in over 55

countries; some 59,000 employees worldwide. ICI has leading international positions in

industrial adhesives, specialty starches, electronic and engineering materials, fragrances,

flavors, food ingredients, specialty agrochemicals, catalysts, synthetic lubricant base

stocks and formulations, personal care ingredients, paints, acrylics, polyurethane

chemical and systems based on MDI (diphenylmethane diisocyanate), ozone benign

refrigerants and titanium dioxide pigments.

STRUCTURE

ICI BOARD

The ICI Board consists of the Chairman, five Executive Directors and five Non-executive

Directors. The Board is responsible for determining the direction and board policies of

the Group consistent with the objective of being the industry leader in creating value for

customers and shareholders.

EXECUTIVE MANAGEMENT TEAM

The management of ICI is through an Executive Management Team headed by the Chief

Executive and comprising the Vice Chairman, Chief Operating Officer, Chief Financial


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Officer, five Executive Vice Presidents, the Senior Vice President of Human Resources

and the General Counsel.

INTERNATIONAL BUSINESS

An Executive Vice President or a Chief Executive Officer heads ICIs International

Businesses. Each is responsible for the financial performance of their business under the

strategic general guidance of the Executive Management Team.

VISION

Today's ICI is about winning - winning to achieve the vision of becoming the industry

leader in creating value for customers and shareholders and to become the most admired

specialty products, paints and materials company in the world.

ICI aims to achieve this through:

Market-driven innovation in products and services. Winning in quality growth markets worldwide ICI will invest in growth markets in which it has leading market positions. ICI's aim is to have all its businesses in such positions and it will do this by

concentrating efforts on the best quality opportunities around the globe.

Inspiration and reward of talented peopleICI is determined to create a way of working that releases the energy and talents of

everyone in the Group.


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Exemplary performance in safety and health.ICI's goal is to have an exemplary performance in safety and health and become the

world leader.

Responsible care for the environment. Relentless pursuit of operational excellence

HISTORYICI was formed on December 7, 1926, by the merger of four of the largest chemical

companies in the UK. Its purpose was to create a British company capable of competing

in world markets with large corporations in America and in Germany. The four

companies merged were Brunner,

Mond & Company Limited, Nobel Industries Limited, British Dyestuffs Corporation

Limited and United Alkali Company Limited.

The plan for the new company was agreed on board the Cunard Line vessel, Aquitania,

on a voyage from New York to Southampton. The architects of the merger were Sir

Harry McGowan, Chief Executive of Nobel Industries, and Sir Alfred Mond, later Lord

Melchett, the Chairman of Brunner, Mond & Company, who became the first ICI

Chairman.

With 33,000 employees, ICI's main products included chemicals, explosives and

accessories, fertilizers, insecticides, dyestuffs, domestic chemicals, leather cloth, printing,


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sporting ammunition and paints. In its first year of business, ICI sold GBP 27 million

worth of these products and made a pre-tax profit of GBP 4.5 million.

Throughout its history, ICI has been at the forefront of scientific discovery and

developing inventions for the marketplace with products such as fertilizers, plastics,

manmade fibers, anesthetics, heart drugs, herbicides, pesticides, commercial explosives,

waterborne paints, reactive dyes and biodegradable plastics.

In 1993, ICI demerged its bioscience businesses of pharmaceuticals, agrochemicals,

specialties, seeds and biological products into a separate, publicly listed company, Zeneca

Group PLC.

Four years later ICI made its biggest ever acquisition when it purchased four businesses

from Unilever - National Starch, Quest, Unichema and Crosfield - for $8 billion. These

operations were merged into ICI to form the basis for the transformation of ICI into the

world's leading specialty products, coatings and materials Group.

ICI has always emphasized research and innovation and is continually engaged in

development programs. The Group relies on 4,000 research, technology and engineering

specialists to maintain a strong technical base and ensure competitive advantage through

the development of new or improved products and processes. Some GBP 200 million is

spent each year on research, development and technical services, to customers. The

results have been most gratifying for ICI, with major discoveries and innovations to its

credit, like Polyethylene, Perspex and the pioneering of many new and efficient processes

and technologies for manufacture.


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The ICI Group today is one of the largest chemical companies in the world, with

international strengths in the areas of paints, materials, explosives and industrial

chemicals. ICI operates its main businesses on an international basis.

In addition, regional businesses located in Pakistan, India, Argentina etc. reinforce the

Group's worldwide competitive strengths.


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ICI IN PAKISTAN

ICI in Pakistan, a leader in industrial chemicals and paints, manufactures and sells a

diversified range of products. The Company's vision is to be the industry leader in

creating value for customers, shareholders, suppliers and employees.

ICI in Pakistan has played an active role in the Country's industrial development and

progress, for well over half a century, and continues to do so, with investment in the

future.

OUR

AGROCHEMICAL

&

SEEDS

PAINTS

POLYESTER

SODAASH

PHARMACEUTICALS

CHEMICALSPURE

TEREPHTHALIC


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Mission Statement

The ICI paints team intends to remain market leaders in the Paints Business.

We wish to be recognized for offering the best products & excellent customer services.

We will run a high quality, profitable and growth oriented business in an exciting and

safe environment.

SWOT ANALYSIS

Strengths

Having a professional management Friendly and cooperative working environment

Technical knowhow & well qualified staff Back selling team, focused directly at consumers, give a way to communicate

directly with consumers.

Brand loyal customers. Excellent financial resources. Well established research and development

Weaknesses

Decision-making on collective basis leads to late decisions. A bureaucratic way of goal setting


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Opportunities

Entering into a new market or segment.New governmental and industrial projects. Innovations.

Threats

Invisible trade barriers.

Mushroom industries Strict government policies


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Introduction of Paint Industry

A chemical oriented liquid used to protect and decorate different kind of surfaces

Paint industry is divided into sectors:

1. Organized Sector

2. Mushroom Sector

Organized Sector

It includes the companies listed in Stock Exchange or the firms registered, having

planned promotional activities with relatively high prices. They fall under the capacity

tax system and distribute in more the one province.

Mushroom Sector

It includes the unregistered firms, having city based distribution with seasonal brands,

having lower prices with no planned promotional activities. They fall under fixed tax

system.

Competitors of ICI

Berger Master paints Gobis paints Buxley paintsNippon paints


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ICI DULUX - THE MARKET LEADER

ICI Dulux is the market leader not only with respect to the quality but also with respect to

turnover. ICI has an edge over it competitors due to its diversified fields. It is known

throughout the world and has good name in other sectors as well, which has given the

advantage to Dulux in paints.

As far as the government is concerned, ICI Dulux is paying all its taxes properly and so it

is not being bothered different government policies.

CORE COMPETENCIES

According to Krajewski:

Core competencies are the core capabilities of a company that it inculcates in its

processes or value chain to deliver the products/services to its customers to satisfy their

needs.

The core competencies can be executed in the form of competitive capabilities in various

dimensions such as:

Cost Quality Time Flexibility

ICI Pakistan Ltd. focuses on providing its customers the products and services on thebasis of all these dimensions, ICI is the market leader in the Paint Industry of Pakistan aswell as a renowned name in the pharmaceutical industry but the company also maintains


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its competitive edge by virtue of being a local manufacturer and major supplier for the

domestic Polyester fiber and Terephthalic Acid (PTA) to industries with short deliverytimes, consistent quality and excellent customer service in Pakistan.

ICI Pakistan Ltd. relies on the following areas for its core competencies to attain its

operations strategy:

High potential market Competitive technology First mover advantage National Company Strength Supply Chain Strategy

The management of the company also believes in providing training to its employees to

ensure continuous improvement in its processes and services. Its commitment to provide

the product and services at competitive costs by achieving efficiencies and maximum

utilization of the resources has made it capable of developing long term relationships

with all its stakeholders.


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PRODUCTION

Product Lines

ICI has diversified product lines like:

Paints Polyester Staple fiber Soda ash

Specialty chemicals Medicines

Market share of different Product line in Pakistan:

Paints 70%

Soda ash 80%

Polyester 25%

Medicines 45%

Product Range (Paints Business)

ICI Dulux isproducing both WATER BASED paints as well as OIL BASED paints.

Water Base Paints

Dulux Pentalite Special Plastic Emulsion (Washable, for masonry surfacestonestructure)


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Dulux Pentalite Natural Whites (for sensitive people from smell, washable withsmooth and durable finish

Dulux Weather Shield (protective paints against extreme weather) Paintex Plus Emulsion ( for price sensitive people) Maxilite (Economical , quality distemper)

Solvent Base Paints

Dulux systhetic Enamel (for wood & metal surfaces) Dulux Pearl Glo (for all surface) Dulux Prime ON (perfect base for emulsion coating) Dulux Red Oxide And Zinc Primer ( to protect metal rust) Dulux Water Repellent (prevents from water and fungal attacks) Dulux Aluminum (for resisting high heat)

Production Process Of Paints

Dispersion Section

In this stage raw materials (Pigment, Resin & Solvent additives) are issued from the

material control department to production department according to the requirement. In

production department raw material are first sent to dispersion section where Wall Mixer

Machine is used to mix all the ingredients. Once the ingredients are mixed then they are

sent to various Grinding Mill Base Machines (Sand Mill, Basket Mill, Bead Mill). These

mills process and grind ingredients for smoothness and dispersion. Here the Gage plate


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(0-50 microns) is used to check to smoothness/dispersion. In this section mixture is

thicker.

Mixing Section

In this section, adding more Resin & Solvent, Additives does further mixing process to

reduce thickness of the mixture. Resin is added to increase the quality, volume and for

further smoothness. Other chemicals are also used to kill the germs and to create

fragrance.

Color Match & Quality Control Section

In this section, special chemicals called Tinters are to add color to the mixture according

the requirement of customers. After adding the color then the quality is checked in the

Quality control laboratory where the followings things are checked:

Color Viscosity (thickness) Weight per liter Glass (shinning) Drying

In color checking, the company has set predetermined color standards (according to the

customer demand) and stable product color is matched according to the standards. If

there is variation then more or less tinters are used to make it according to the standards.

Filling Section


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After matching the colors, the finished product is sent to the Filling Section where Fix

Mixers are used to fill the tins/containers according to their capacity. Ink Jet Machine is

used to print the manufacturing date, expiry date, product price, sales tax, color, and

quantity/volume and product codes. After filling the containers, weight is measured on

the computerized scale. Now the paints are filled in plastic containers for the customer

benefits.


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CAPACITY

It is the maximum rate of output for a facility that even achieved.

No. Of Plants and Their Capacity

ICI has one plant for paints manufacturing located at Lahore. The total capacity of this

plant is 18 million liters per year.

Utilization

Maximum Total capacity = 18 million liters per year

Actual production = 14 million liters per year

Normally they are using two shifts per day.

Utilization ( %) = actual capacity/max capacity = 77.77%

Capacity cushion= 100%-77.77% = 22.23%

FORECASTING

It is a prediction of future events used for planning purposes. ICI make use of the

following approaches in forecasting.

APPAPPROACHES TOWARDS FORECASTING

Forecasting is a function of demand, and three approaches are normally available for

making the forecast of future demand as:

(A)QUALITATIVE APPROACHThis approach incorporates important factors like decision makers emotions, experience,

judgment, etc.It includes:


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Executive opinion Sales force forecast Consumer market survey

(B)QUALITATIVE APPROACHThis approach employs a variety of mathematical models that use historical data to make

a demand forecast but ICI uses average method on the basis of historical data.

Demand PatternICI Paints have a seasonal demand pattern. They have a greater demand in peak periods

like September, October, November, February and March due to Eid and marriage

occasions. But they have demand is less in rainy seasons.

INVENTORY & MATERIAL MANAGEMENT

Material management is concerned with following tasks

Inventory control at stores etc. Supplier selection Issuing purchase releases Work force schedules Inbound transportation & Outbound transportation Inventory control at distribution center

Inventory level determination and inventory management is the crucial events for any

organization. Determination of inventory level depends on the future demand.


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USES OF INVENTORY

Inventory is used to

Provide the stock of goods to meet anticipated demand De-couple production from distribution Take advantage of quantity discounts Hedge against inflation

Protect against shortage Permit operations to continue

TYPES OF INVENTORY

Following are the types of inventory that might be found in any organization. They

are also found at ICI Pakistan Ltd.

Raw material inventory Work-in-process inventory Finished goods inventory

INVENTORY MANAGEMENT AT ICI

Management at ICI carries out the basic functions of inventory management in a

sophisticated way. Basically, ICI gives close focus to the inventory functions like

purchasing and distribution. The raw materials used are

Pigment Resin Solvents Additives


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INVENTORY CONTROL & RECORDS AT STORES IN ICI

ICI is very concerned with inventory records and controls, which is one of the factors

contributing towards their success. Store is headed by store supervisor or store officer.

They told me that they keep record of every type of material with their weight and

quality. They have to maintain record of ledgers manually and computerized as well.

When some departments require certain part then they issue with the permission of

manager (Dept) & record in their books.

INVENTORY INSPECTION

At ICI, inspection of inventory is made. Actually, the purpose of inspection is to see that

whether the inventory level has reached to the level that has been designated as reorder

point. If this reorder point is reached then the order is placed.

RELATIONSHIP WITH SUPPLIERS

ICI maintains a very cooperative relationship with their local and foreign suppliers. They

also invite their suppliers to their organization.

PROCUREMENT DEPARTMENT

This department arranges for purchase of an item and when that item is to be purchased.

Then store records it and keeps it in a specified location & issues it to the desired

department.

PROCUREMENT PROCEDURE

Production demand & monthly forecasting is considered keeping in viewlead-time &

minimum stock level. ICI purchase its raw material from local as well as from other


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countries. They import some items like Titanium dioxide, which is used in paints and

purchased some, items locally

Account department issues checks for payment Lead time for imported items is 30 to 70

days. When purchased items enter the factory gate then they are checked by gatekeepers

& send to store.


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DISTRIBUTION SYSTEM

The distribution system of ICI Dulux is dealer oriented. It has a wide network of

distribution throughout Pakistan but all the distribution is done through dealers. ICI

Dulux has its own warehouses and from there the products are directly transported to the

dealers who ultimately sell them to the customers.

Therefore the Distribution Channel of all sorts of paints is

ProducerDealerConsumer

TOTAL QUALITY MANAGEMENT AT ICI

At ICI, quality is employed in each and every step of production process and it starts

from the purchase of raw material and ends at the final product.


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RAW MATERIAL CHECKING

All raw materials and their quality are checked so as to ensure that no material with bad

quality could harm the quality of finished product.

QUALITY TESTING

ICI Paints has a proper and standardized Quality Control Laboratory, which test the

quality of paints. They check opacity, density, smoothness, drying, glass, color, life,viscosity and weight.

EMPLOYEE INVOLVEMENT IN TQM

It is very necessary every employee should take interest in maintaining the quality of

product. ICI are taking various steps to involve their employees in TQM by giving them

training, continuous feedback, incentives and awards & by encouraging teamwork. They

give annual rewards to those employees who give more suggestions to improve quality.


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ISO Certification

1. ICI & ISO 9000 StandardsISO 9000 is a set of standards governing documentation of quality program. ICI become

certified in 1999 by complying the requirements of ISO 9001. ISO 9000 is an overview

document, which provides guidelines for selection and use of the other standards.

2. ICI & ISO 9001 StandardsICI has got ISO 9001 in 1999 by meeting all the requirements, which are included in this

standard. ISO 9001 is a standard that focuses on 20 aspects of a quality program for

companies that design, produce, install and service products. These aspects include:

Managementresponsibility

Quality systemdocumentation

Purchasing Product design Inspection Training Corrective action Produce Installation Service


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CONCLUSION

ICI Pakistan Ltd. has a diversified manufacturing portfolio ICI is the market leader in the

Paint Industry of Pakistan as well as a renowned name in the pharmaceutical industry.

The company also maintains its competitive edge by virtue of being a local manufacturer

and major supplier for the domestic Polyester fiber and Terephthalic Acid (PTA) which

gives them a competitive edge over other chemical manufacturers, along with its long

term relationship with customers, suppliers and other stakeholders. Their automated

process gives them a competitive edge in the production efficiency. They are following

ISO standards, MRP Class A and are laying foundation of HSE&S standards along withthe continuous improvement in their production process to optimize the utilization of the

available resources.

ICI Pakistan Ltd. is striving for betterment, now operating at PTA production of 40 tons

per hour plant capacity; however the plant was initially designed for 44 tons per hour

PTA production. Their plan for a power plant installation is also a step towards making a

more competitive edge and maximizing its efficiencies. This 40 MGW power plant is

being installed and engineering is in process.

ICI Pakistan Ltd. keeps a record of its inventory as well as their scheduling mechanism

that keeps the track of all the processes and planned productions. Forecasting helps them

to predict the demand of PTA in the market and plan their production accordingly. The

production and operations management system in ICI Pakistan Ltd is a good example of a

sound production and operations management system in an organization.

production and operation management report

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