supply chain of mehran foods report
TRANSCRIPT
Supply chain of Mehran Foods
May 12
2015 SUMITTED BY:
HAMZA ULHAQ (0323)
ANAS IQBAL (0435)
M.NAVEED IKRAM (0992)
SAAD SIDDIQUI (1169)
M.OWAIS ARIF (0826)
MUHAMMAD BABAR PERVEZ (0573)
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Table of Contents INTRODUCTION ...................................................................................................................... 3
VISION ............................................................................................................................... 3
MISSION............................................................................................................................. 3
BUSINESS MODEL ................................................................................................................... 4
PRODUCT LINE ....................................................................................................................... 4
COMPETITIVE STRATEGY ......................................................................................................... 5
SUPPLY CHAIN PROCESS.......................................................................................................... 5
Supply chain model of mehran foods ....................................................................................... 6
SUPPLIERS: ......................................................................................................................... 7
PRODUCERS:....................................................................................................................... 7
WAREHOUSE: ..................................................................................................................... 7
DISTRIBUTORS: ................................................................................................................... 7
WHOLESALERS: ................................................................................................................... 7
RETAILERS: ......................................................................................................................... 7
PUSH AND PULL STRATEGY...................................................................................................... 8
DRIVERS OF SUPPLY CHAIN ..................................................................................................... 8
INVENTORY: ....................................................................................................................... 8
SOURCING: ......................................................................................................................... 8
TRANSPORTATION: ............................................................................................................. 8
LOCATION: ......................................................................................................................... 8
DECISION PHASES: .................................................................................................................. 9
SUPPLY CHAIN DESIGN: ....................................................................................................... 9
SUPPLY CHAIN PLANNING:................................................................................................... 9
SUPPLY CHAIN OPERATIONS: ............................................................................................... 9
PRODUCTION, PLANNING AND CONTROL FORECASTING TECHNIQUE AND TOOLS USED BY THE
COMPANY: ........................................................................................................................... 10
ROLE OF AGGREGATE PLANNING: ...................................................................................... 10
ROLE OF MPS IN THE PRODUCTION:................................................................................... 10
INVENTORY MANAGEMENT TECHNIQUES AND TOOLS ............................................................ 11
INDEPENDENT DEMAND.................................................................................................... 11
DEPENDENT DEMAND ....................................................................................................... 11
SOURCING............................................................................................................................ 12
VENDOR SELECTION CRITERIA:........................................................................................... 12
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DISTRIBUTION STRATEGY AND TRANSPORT NETWORK DESIGN ............................................... 13
PEST Analysis........................................................................................................................ 13
POLITICAL ......................................................................................................................... 13
ECONOMICAL: .................................................................................................................. 13
SOCIAL ............................................................................................................................. 13
Technological ................................................................................................................... 14
Porter’s Five Forces Model of Mehran Food ........................................................................... 14
Threat of new entrants...................................................................................................... 14
Bargaining power of suppliers............................................................................................ 14
Bargaining power of buyers ............................................................................................... 14
Threat of substitute product.............................................................................................. 14
Rivalry among competitors ................................................................................................ 14
REFERENCES ..................................................................................................................... 16
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INTRODUCTION
Mehran spices and food industry is an organization that was initially built at a small scale
in Pakistan, as a food processing and packing industry. In a very short period of time, it
has flourished into an increasing business.
At that time, the industry actually started the idea of ready-made spices and pickles was
not too much popular among the Pakistani people. The owner moved to Saudi Arabia and
Mehran began to export all of its products abroad. Mehran’s products and got a great
response from Saudi Arabia. It has been 35 years now that Mehran has been initiated and
it has gotten the best export in spices award for the past 27 years. In the past years
Mehran has now become a huge organization that manufactures a large variety of ready to
cook recipes, spices, pickles and so on. There are three units right now, one in tharparker,
one in Jeddah and one in Dubai. The main unit is however in Karachi that directs all the
other units. The latest achievement in this regard for MEHRAN SPICE & FOOD
INDUSTRY has been the ISO 9001:2000 certification.
VISION
“To be one of the best food products locally and globally that has and will continue to
provide quality food products to its consumers”
MISSION
“To promote and maintain Mehran spice and food industries as a quality food product
company, that is welcomed into people’s homes, hearts, minds, and their kitchens locally
and globally.”
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BUSINESS MODEL
Mehran food and spices is leading there organization because of their products and
availability of the products because of the competitors in the market. The major
competitors are Shan food and National food whose product lines are Bombay Biryani,
Qorma, Nihari, etc. similar to the Mehran food. So, the company works according to the
plan and keeping in mind about their competitors.
PRODUCT LINE
Straight spices in which includes:
Curry powder, Chilli powder, Black pepper powder, and etc.
Recipe mixes in which includes:
Biryani recipe mix, Qorma recipe mix ,nihari mix, and etc.
Pickles and Chutnies in which include:
Mix pickle, garlic pickle, mango pickle, and etc.
Deserts in which include:
Badamkheer, Sheer khurma mix, pistachio kheer mix and etc.
Rice in which includes:
Basmati kernel and Basmati sella.
Pastes in which includes:
Ginger garlic paste, ginger paste and garlic paste.
Pet Jar in which includes:
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Curry powder, Biryani recipe mix and Fish recipe mix, etc.
COMPETITIVE STRATEGY
They believe their competitive strategy is the superior quality of the products and
the attainment of the raw materials from the suppliers as they get the best quality of the
products which are passed through different stages of quality control and strict checking
from the Research and development department. Keeping in view the global success of
Mehran, the company was aim to establish itself in Pakistan as well. The spice market in
Pakistan is ever increasing and penetration into such a huge market is a difficult task.
However, Mehran was up to the challenge and established effective distribution system
successfully all over Pakistan. Today by the Almighty's grace & support from our
valuable customers, Mehran enjoys a leading position in the market place.
SUPPLY CHAIN PROCESS
Raw materials for Biryani and Bombay Biryani are purchased altogether. Mehran
maintains its strategic fit by never compromising on the quality so, the raw materials buy
for local and export are the same as they want the people here and out of the country to
have the same taste and superior quality for example: chilli powder obtained for the local
industry and export always be same for all the spices. All the spices are grinded together
and there is no difference between the local and export. The only difference is that the
packaging of the spice for the two markets.
Specifically for biryani masala the raw materials are stored in their own
warehouse. They have the grinders of 4 tons of capacity each. The raw material is then
fumigated which is a 72 hours process. Then they are grinded and fumigated again. After
72 hours of fumigation the process of packing takes place. With the help of machinery
and technology all the spices such as taezpatta and cardamom added as whole into the
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packet in appropriate quantity. No packing is done without quality guarantee. R&D
department balances if there is any fault in taste. R&D department performs cooking after
adding all the spices and then that is checked perfectly to obtain desired results. The
whole process is repeated again if there is any problem. The chillies used everywhere in
Pakistan are same and standard. Some are imported from India known as Sanam mirch
which is different and less spicy and reddish. Quality is maintained by Mehran in every
possible way. For example no additives or artificial flavors are added. The level of spice
to be used in each masala is maintained at an average as grinding is done in tons.
As the packages are made finally they are hand labeled according to customers and placed
in cartons. A 20ft container can have 1600 packets. The daily capacity is 4000- 5000
packets to be produced. Then they are labeled customer wise whoever wants how much
packets. Based on customer demand they are divided. All the stock is made and packed
overall only the master packing labeling is done in a different way.
Supply chain model of mehran foods
Supplier Manufacturer Warehouse Distributor
Whole sale &
retail
Push strategy of mehran
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SUPPLIERS:
They have fixed suppliers as they do not compromise on quality of the raw materials and
want to provide the best products in the market. Suppliers provide them the raw materials.
The raw materials for local and export are the same.
PRODUCERS:
Production takes place as the raw materials come to the factory. There is a single factory
of Mehran for local and export items. All the manufacturing is done here.
WAREHOUSE:
After producing the goods it goes to the warehouse. The company has a single warehouse
and it does not hold a lot of inventory in their warehouse because they manufactures
according to the customer demand and provide products on a daily basis. So, the company
saves a lot of cost to hold the inventory in warehouse.
DISTRIBUTORS:
As the production completes the final products are packed and given to distributors. The
export items are sent through sea to Jeddah or wherever the demand is from. For the local
market trucks are used. It is then the responsibility of the distributor to distribute
accordingly.
WHOLESALERS:
Mehran provides their products to the wholesalers in bulk quantity such as Hyperstar,
Chase, Metro, Imtiaz super market etc.
RETAILERS:
There are more than 60,000 shops in Pakistan where Mehran is available. They also have
more than 3000 retail stocks.
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PUSH AND PULL STRATEGY
The Mehran Company uses both push and pulls when they targeting the customers within
the country, then they are using push strategy because of strong competitors in the
markets. So, they need to provide every product on every retail stores especially on
seasonal occasions like Ramazan, Eid, etc. they are using lean manufacturing because
they want continuous improvement in manufacturing.
They also used pull strategy when the orders come from the abroad because they also
manufactured according to the demand. Mehran works on the policy of dealing with
suppliers three months in advance. So, the company delivers the finished Goods as soon
as possible. They are using JIT delivery.
DRIVERS OF SUPPLY CHAIN
INVENTORY:
Mehran is well-organized when it comes to inventory. They do not keep stocks of
inventory. They keep raw materials which they order every 3 months in advance from
suppliers then provide the customers with the products according to the demand. They
manage inventory everyday.
SOURCING:
Mehran is responsive in terms of sourcing. They have fixed suppliers so that there is no
compromise on quality.
TRANSPORTATION:
Mehran is cost capable in terms of transportation as they use the cheapest way of
transport for export which is sea and for local markets trucks are used.
LOCATION:
Mehran is responsive in terms of location as they are customer oriented. They have more
than 3000 stock retailers and there are more than 60,000 shops where Mehran is available
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in Pakistan. So they have tried their best to be responsive to provide Mehran to customers
wherever possible.
DECISION PHASES:
SUPPLY CHAIN DESIGN:
The first important decision is the supply chain designs that how the supply chain would
be designed in order to carry out production.
SUPPLY CHAIN PLANNING:
In this phase Mehran makes decisions of which and how the markets would be served.
Their distribution is accepted zone wise.
SUPPLY CHAIN OPERATIONS:
Supply chain operations takes place when the whole planning is done about how the
customer demands would be fulfilled. According to our interview the Manager told that in
Mehran planning is done in advance. The raw materials are booked by the suppliers 3
months in advance and seasonal too. The prices are set before the raw materials are
acquired and all the planning is done ahead of the production. As whole supply chain
depends upon the circumstances of the city which are uncertain.
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PRODUCTION, PLANNING AND CONTROLFORECASTING
TECHNIQUE AND TOOLS USED BY THE COMPANY:
As they are 3 month ahead they do backup planning. They work according to 3
months advance and seasonal. They ask seller that they need certain thing from them and
they do booking for that. They provide them purchase order. Everyone knows that the
closing is in June. Price is already set at one time. The rates of the vendors or export are
only fluctuated on government’s policy. The taxes depend upon government. Seasonal
items such as lemon, plum is done on crops. They have their own farms. Rates are
decided by the seller that whatever the crop would come in this season the rates are asked
by the company in advance. The rates depend upon the crops quantity.
ROLE OF AGGREGATE PLANNING:
Aggregate planning is a process by which a company determines ideal levels of
capacity, production, subcontracting, inventory, stock outs and pricing. It is the overall
planning done by a company to meet the demands of the customers. Mehran’s daily
capacity is of 3000-4000 packets. To carry out production they need to plan accordingly.
ROLE OF MPS IN THE PRODUCTION:
The production schedule for Biryani depends upon orders. If one month the
demand for biryani is less the production is done consequently. Mehran works on buyer
oriented technique. For example: Last February they did export of three hundred and
fifteen million dollars so it means that they would think of more export in the future and
so the export department would negotiate with the customers that this time we have to do
this much closing. Planning is done in advance.
According to the interview taken by us the Manager said that the production
preparation and all such things look good in books but practically speaking everything
depends upon situation like the stock is ready but there are no containers for lift up. Long
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term planning is done where there is free zone and the exporters are free to do whatever
they want to.
INVENTORY MANAGEMENT TECHNIQUES AND TOOLS
Inventory is managed day to day. They do not keep stocks of inventory as they
have booking of 3 months from suppliers for the raw materials so they do not keep final
products at the warehouse as inventory.
INDEPENDENT DEMAND
The final product is the close relative item which is the Biryani masala. Its demand is
linked with customers’ orders directly.
DEPENDENT DEMAND
The raw materials which are used for the production are the dependent ones as they
depend upon how much quantity of masala is to be produced.
An average has been set by the company of all the products which are used to complete
the package. As the production is done in tons so automatic machines are used which fills
the packets with a sure amount of all the products which are to be used.
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SOURCING
VENDOR SELECTION CRITERIA:
Selection of vendors is very important because of a number of factors such as:
Cost of materials
Reliability
Quality
Financial aspects
Innovation
Lead times
Mehran selects suppliers on the basis of the quality of the products. When the ram
material comes to the factory it is checked by the quality control department and if they
find some problem the whole trucks are sent back. therefore there are suppliers are few
but those who assure them of the best quality.
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DISTRIBUTION STRATEGY AND TRANSPORT NETWORK
DESIGN
All the export is done by shipments through sea. The local distribution is done
through trucks.
Distribution in Karachi is zone wise. They have their own distributors. Mehran
has a single warehouse from where distribution is done. There is a single warehouse
which is at Korangi so it fills up all demands like from Karachi to Khyber and others.
The products go from the warehouse to the distributors. It is then the will of the
distributors to distribute it as they want to. In Pakistan there are more than 300
distributors and sub distributors. There are more than 3000 stock retailers and more than
60,000 shops in Pakistan except Hyper star, Metro, Utility stores where Mehran is
available.
PEST Analysis
POLITICAL
Mehran run its operations by the government rules and regulations. But the instability of
political conditions like strikes, road blocking and load shedding that creates a lot of
problems for the company to deliver the goods on time.
ECONOMICAL:
Inflation rate of Pakistan is very much high so, the customers are not ready to purchase
the high price products. Mehran food provides the low cost products with better quality
among his competitors.
SOCIAL
Mehran food provides the quality products to their customers keeping in mind everything
that harmful for the society. The packaging the products are very good and also generates
the awareness about safety and healthiness
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Technological
The technology factor also effects environment. Technology brings competitive
advantages. The company uses ERP and SAP system to improve efficiency and to
achieve their goals.
Porter’s Five Forces Model of Mehran Food
Threat of new entrants
The overall structure of the industry is open and there is low barrier to enter in the
industry. So there is always a threat to the company as far as new entrants are concerned.
Bargaining power of suppliers
There are so many suppliers in the industry for raw materials of masala items so suppliers
has less bargaining power to the company and the company has a high bargaining power
to the suppliers.
Bargaining power of buyers
As far as the competition is high the bargaining power of buyers is low in the food
industry.
Threat of substitute product
There is always a threat of substitute products because of increasing pie of the market and
industry. Many substitute products are available that’s why threat is high for Mehran
Foods.
Rivalry among competitors
The rivalry is very high because there are so many competitors of Mehran Foods and
every individual company is working on reducing cost and increasing their quality to
increase their market share.
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