Shamim & Company (Pvt) Ltd. Pepsi Cola Bottlers - Production & Operations Management

Shamim & Company has completed 29 years of its operations. Operations management functions are being successfully implemented by management. A brief summary of operations management functions studied by this group are described below.

Product Planning:

At present new product decision is taken by the top management. Demand for new product is investigated by production manager- terms of raw material, machinery operations, and quality. Fro this purpose he can get guidance from constructions. Finance department evaluates financial viability. Sample production is conducted. Response from buyer in terms of satisfaction and company’s ability to meet the requirement helps in deciding to produce new product.

Process Design:

In the company process is continuous supply of concentrate is critical but process can be automated. Process is flexible and production on plant can be changed within one hour. Production on plant can be changed within one hour. Production is of large scale and covers a wide area for the distribution of the product.

Facility Design and Layout:

Facility design and physical layout of plant, supporting facilities and building is provided by the parent company that is PEPSI COLA International. Transportation costs with the plant is minimum. Physical layout provides maximum utilization of available space by optimizing costs.

Inventory:

Company is not using the quantitative methods for calculating economic order quantity, reorder point, safety stock and annual inventory cost. The company does not give importance to control inventory cost. Lead time is usually 2 days an in an exceptional case it can be up to 4-5 days. this also one reason that EOQ, ROP, lead time are calculated using qualitative techniques, by estimates of experienced managers.

Martial Requirement Planning:

Company produces beverages and uses Sugar, Carbon Dioxide, Ammonia and concentrate as raw material. Sot drink is a seasonal product. Most of the sale is done during summer season. Concentrate is bought from the franchiser PepsiCo. Sugar is bought directly from the sugar manufacturers of the area. CO2 is prepared within the premises, which is enough for the full capacity of two plants. When during samara 4 plants are in working, CO2 is purchased from the outside suppliers.

Quality.

Quality standard are followed at each and every step. Shamim & CO. has won best quality award for many times by PepsiCo competing all the Asian countries. Quality control labs are fully equipped. Quality controllers are at home in their jobs. That’s why the quality control efforts are recognized by the international management of Pepsi cola. This “serves as motivator for the organization, on no compromise on quality”.

Company Profile:

Pepsi co. is in-fact a corporation listed in the New York Stock Exchange USA. It is the owner of globe products like Pepsi Cola, Team, Marinda etc. Being owner of the products they give the rights of manufactures of its products to different countries. All over the world, the products are standard. If you buy a Pepsi from a remote area like Talamba and from Washington D.C., you will find absolutely same taste and color. Franchisees have to follow these standards; otherwise they have to face penalties from the real owners of the product. In Pakistan there are 10 units of Pepsi cola are working. Each unit has its own license of production. And each unit has its own territory in which it can sell its products. No unit can interfere in the area of other unit.

Brief History:

Shamim and Company was introduced in 1967 as a (Pvt.) Limited company. It started its production in 1968. In the early stages it was famous with the name of 7-up factory. Because 7-up was its first product. The other brands were introduced after 7-up. Pepsi Cola, Marinda and Green Marinda have been different products of Shamim and Co. Since its introduction. At present 7-up, Pepsi Cola and Marinda are being produced.

Company Characteristics:

Shamim & Co. is the biggest soft drink manufacturing unit in Pakistan with its four plants having full capacity of 50,000 crates per day. Company covers area of Southern Punjab including Sahiwal, Mianwali, Rajan Pur, Bahawalnagar and Khan Pur.

Organizational Structure

Location

Location has important impact on company’s ability to compete and on its exposure to risk from external factors. In a dynamic market the company may expand, add or relocate new facilities.

Location decisions are important due to following reasons.

- Competition.

- Cost.

- Hidden effects.

Factors that effect the location decisions are

- Market related factors.

- Tangible Cost factors.

· Transportation.

· Labor availability and costs.

· Energy availability and costs.

· Water availability and costs.

· Site and construction cost.

· Taxes.

- Intangible Factors.

· Legal regulation.

· Community attitude.

· Expansion potential.

· Living conditions.

Steps in Location Selection are:

- 1) Select the general region, select generally acceptable communities.

- 2) Select appropriate sites within communities.

- 3) Determine method of evaluating community site combination.

- 4) Compare sites and select one.

Shamim and company is located near MDA chowk Multan in province of Punjab. The site of company is not of some strategic value. Because Shamim and Co. covers a large area of Southern Punjab. So there is no importance of site with reference to the other cities of this area. Any way; site of the company is considerable for Multan. As the major proportion of population lives in Cantt. and Down town (city). The site is nears to these both areas. In this way transportation cost to these 2 areas in very less. In this way it can serve it customers effectively and efficiently.

Location Factors:

Market Related Factors:

As the unit is located in Multan which is heart of its selling territory. In this way transportation cost is not high. Mean while its major revenues are collected from Multan and Bahawalpur. In so far Multan is concerned, transportation cost is minimum and Bahawalpur is only 60 miles away from Multan. In this way Multan is the city which can supply the product in all areas of its territory on right time.

Labor Availability:

Cost of labor is very important while setting up a plant. As there were villages in the west of the company when it was inaugurated. So labor was in ample supply at cheaper cost. But now all over the unit there are suburb colonies. But labor supply in still not a problem.

Energy Availability:

As the plan requires a large amount of electricity. Electricity is available at location on similar prices like all other areas of Pakistan.

Water Availability:

As the plant also requires huge amount of water, and at the site under ground water is easily available.

Social Response:

Public opinion is very favorable toward the company. Mean while the organization is not causing any pollution.

Expansion Potential:

In the early days of production, there were expansion potential in unit. So the unit is expand by putting 2 new plants. But at the moment there is no expansion potential.

Departmentalization:

There are six departments in the company, which are

1) production

2) Marketing

3) Finance

4) Sales

5) Shipping administration

6) Personnel.

In each deptt. there is a manger which is responsible for the working of his department to the general manager. A manager has an assistant manager. After Ass. A manager their are Shift Incharge in production and supervisors in sales. They control the activities of operatives.

Product Planning:

Uptill now the company has not produced any product of its own and there is no concept of product planning in future as well, because the management considers it a very theme to introduce a new brand of their own. In the brand like Pepsi Cola and 7-up are selling in the market like hot cakes. Meanwhile the people in Pakistan are reluctant to purchase Pakistan branded beverages and we don’t find any successful domestic brands of soft drinks in Pakistan. That’s why the management does not have any motivation to do product planning.

Shamim and company is a cold drink manufacturing unit that comprises of four plants to produce drinks. Investing in such a unit involves large investment of capital for long period of time, and requires considerations of all types.

Operations Planning

Process Design and Facility Layout

Having done the location selection company design a building, select the appropriate process technology and equipment and arranges it in away so that it has greatest potential to meet the strategic demand of organization. Experience and informed judgment are useful guides to layout decisions. Computer models are available to assist in deicing factory and office layout.

The type of operations to be performed in a facility, influence the facility’s needs and layouts. Equipment involved effects the layout. Facilities must be designed for the efficient operations in the organization.

Layout for Operations:

Facility is designed in numerous ways to support this work to be done within each facility numerous factors must be considered. Amount of available space and its shape. Design objective is very imprint. some of layouts are:

· Retail layout.

· Office layout.

· Distribution and ware house layout.

· Manufacturing layout.

Manufacturing Layouts

Jobshop Layout:

It is also called layout by process, functional layout. Any particular item in the job shop may require a unique sequence to convert the req. material to the desired and item. all people and equipment that perform the same function are grouped together.

Flow Line Layout:

Involved the arrangement of activities in some sort of line along which a service receiver or product process moves. This is called lay out by process. Machines or pieces of assembly equipment are located along the route over which product travel and are arranged in the sequence required by production plan. the path of flow may follow straight line or any other shape.

Layout By Fixed Position:

Organization choose to bring the necessary people and equipment to the item being produced. Work item does not move from one operation to another. Fixed position layout may be used because the work item is too fragile, too bulky, too heavy to move without complications. Fixed position method necessitates the use of portable equipment.

Many organizations find that no fixed type meets their needs but instead that combination of types work well.

Manufactering Process:

In Shamim & Co. manufactering process is as follows;

Water Extraction:

Raw water is extracted from the sources. It is treated to remove its hardness. Here water is tested in lab to check it harness. If water has some Co3 or Hco3 it is drained and again soft water is used in the preperation of syrup.

Preperation of Syrup:

Syrup is prepared with sugar, concentrate and water. this syurup is heated upto 90 C to get it pasturized. this hot syrup is collled down and stored in the tanks. Here lab testing of syrup is done to check its quality standard.

Production:

Syrup is sent to Carbo Cooler. During flow of syrup from tanks to Carbo Coolers, Ammonia and Carbon Dioxide are mixed in the syrup.

In production process empty is feeded from on side. This emplty is washed and light check is done to see quality of washing.

From Carbo Cooler syrup goes to the Filler. At filler syrup is filled in the empty bottles, and Cap Crown is fixed on the bottols. Here and operater looks after the filling process. He can increase, derease or even stop production speed accordingly.

Filled bottols are tested in lab. by taking samples. Light check is done to check the level of syrup in bottles and chek some solid partieals. The overfilled or underfilled bottols are separated. If some partical is found in some bottlol it is also separated.

After light check bottols passed under a printer and code is printed on the bottoles, with this code the date of manufactering and shift time can be identified.

When all checking process is done the bottlols are cased in the crates.

The whole process of manufactaring is automatic. It required a little supervision. Raw material is put from one side and filled bottles come out of the process.

Support Facilities:

Support facilities are carried out in such a way that the direct operations can function smoothely. support facilities are essential for operations. Some of departments to be considered in layour are

· Inventories, material and suppliers.

· Tool room.

· Inspection and quality control.

· First aid.

· Maintenance.

· Safety and security.

· Clerical and bookkeeping.

· Tube well.

· Airconditioning plant.

· Transformer.

· Equipment for work shop.

· Bailing press.

· Parking facility.

· Canteen.

· Emergency situation analysis.

· Medical facility.

Considerations for inventory layout are considerable.

Inventory Management:

Inventory is very important to many companies because it helps the company respond quickly to customer demand, which is an important element of competitive strategy. Inventories of raw material or partially processed goods can help a company complete the production cycle in a much shorter time then would otherwise be possible. The more affective a company inventory’s system, the better able it is to manage its resources and to compete effectively.

An inventory system is collection of people, equipment and procedures that function to keep account of the quantity of each item in inventory and to determine which item should buy or produce in what quantities and at what time. Some inventory systems require transaction reporting to keep track of every instance in which units are added or taken from the existing inventory at Shamim & Co. can be classified int five categotries.

- General items.

- Part items.

- Electirc items.

- Lubrication items.

- Stationary items.

Issuance of Differant Items:

When production department requires a particular item from inventory, they fill the requisition slip. One copy is kept at the store and a carbon copy is kept by the production deptt.

This slip includes the quantity issued, stock register page number, iteem code, This slip is signed by the production manager. Inventory items are issued on these slip.

Control of Inventory:

At the end of each month, store prepares a monthly consumption report. This report includes the detail of all the inventory items which were consumed by the production deptt. of Shamim & Co. during the month.

In this way the inventory is controlled in the Shamim & Company.

Quality Control

The quality control should

1. Define specific product and service quality level requirements.

2. Determine the relationship of design and process characteristric to output quality and related process requirement.

3. Dewtermine methods, personnel and equipment for measuring quality.

4. Measure and record the quality achieved.

5. Trigger corrective processess when actual quality varies from the acceptable quality.

Specification of quality requirements begins in market research continue as part of the product design activity, and culminates in the quality specification and design subsystem output. That output defineates the specific product or service attribute that effect the quality and must be assured.

The Quality Specification And Design Subsystem

The activities of this subsysten are integral part of the product design activities, its objectives are to be determine that the new design output

1. Will meet the customer need.

2. Will operate under end use conditions.

3. Can be produced or provided given the organizions capabilities.

4. Will function with the specified level of reliability in terms of minimum means time between failure.

5. Will require less than a specified amount of maintenance hours and material costs operating hour.

6. Can be required within a certain time frame.

Quality Assurance:

Quality assurance is the title given to those management activities and systems required to provide assurance that the over all quality controlled task is being carried out. The quality asssurance system is the aggregate quality management system. It interfaces with other general management system performong similar functions relative to the organizations financial personnel facilities and marketing policies

Process Quality Planning & Control Subsystem:

This subsystem concerns the what, where, when, who of quality control during operations. It frequently involves major expenditure for personnel, equipment, inspection and testing activity.

The objectives of this subsystem are to be......

1. Determine the process attribute and characteristic to be measured.

2. Determine the methods of measurement and develope detalied instructions describing the measurement process.

3. Determine, select and train the personnel required to implement the quality control procedures.

4. Measure and record operational quality interms of the number of defects and seriousness of defects and causes of defect.

5. Provide corrective action procedures forout of control situation.

6. Define the dispositions of quality deficiencies.

Personnel :

Briefly, individuals must be selected and trained to caryy out the measuring process. The capability necessary and number of individual required, selected and trained for implementation of measuring procedures. Development of the skills of quality control personnel is a continuous process as products. Processess, the equipments and procedures evolve.

Measurement And Documentation

Product quality must be measured on both quantitative and qualitative basis, and the measurements must be recorder. Quantification of the qualitative aspects occurs whe defects are classified into categories such as critical major, and minor, which were describe earlier. A classification such as this one of the inputs to the organization’s as greater measure of quality.

Product or services that do not meet the desired quality standards generate two types of required corrective actions

1. The disposition of the defective product or service.

2. An analysis of the cause of the defeciencies.

Disposition

Defective products fall in to three categories:

1. Defective units are beyond being reworked and must be scrapped.

2. Defective units can be reworked to meet specification.

3. Defective units can be modified to meet all the functional requirements but still not meet the atandard blueprint specification.

The latter units are approved on a variance basis:

Many organizations establish a material review board, consisting of engineering, manufacturing quality control, marketing and a customer reprentative to review proposed rework of defective parts that are out side the standards of blueprints qualifications. Approval by all the members must be recevied before rework can procede.

Purchase of Raw Material:

Direct raw material for the products include the following items.

i) Sugar

ii) Concentrate

iii) Treated water

iv) Empty bottle

v) Amonia and Carbon Dioxide.

From above items only concentrate is provided by the franchiser. All other raw material is purchased by the company itself.

Sugar Quality Testing:

Purchase of sugar is a critical step in the purchase of raw material. When sugar bags are arrived at the plant that time it has to pass through a strict quality check. In fact sugar quality is very very important in the production of the beverages.

In order to test the quality of sugar first supervisor checks the apparent status of sugar. It should be free of moisture. After that randomly selected sample from sugar bags is sent to labortary for labortary testing. If sample is passed the sugar is stored for further processing. If sample is not passed then the whole lot is sen back to the sugar mill.

Concentrate:

Concentrate is the most important raw material raw material used in the production. As concentrate is supplied by the franchsder from the peant located in industrial zone Hatttar, so there is no question about the quality of concentrate.

Water Treatment Tests:

The company has installed four tubewells to meet the requirement of water. The extracted water is then treated for the use in the final processing. At different staged of treatment tests include:

1 Upper tap tests.

2 Sand filter and carbon purifier test.

3 Water softness test.

For this purpose the company has prepared forms for the record of these tests which are signed by the shift incharge after each shift. If he observed some abnormility he stops supply from one container and provides the required water through other container. The company has two ocntainers for the supply and storage of trated water. The closed containe4r is then sanitated and washed back. The sanitation and washing back of containers is also done at regular basis, after ten days.

Syrup Testing:

After mmixing water, sugar and cocentrateit is treated at 900 C and then it is stored in the tanks. This is called simple syrup. This syrup is tested in the lab. This syrup goes into carbo cooler. Here Ammonia and Carbon Dioxide are mixed in the syrup. This is called finished syrup. The finished syrup is also tested in the lab. If chemist finds any deviation from the standards, the syrup is drained before any further processing.

Finished Bottle Tests

When the bottles are filled at filler, the chemist take sample after every half hour. If any deviation from the standard is found the whole batch is drained before going in market.

A microbiological test is also taken by the chemist after a week of production. If any kind of germs growth is found the stored bottles are declared rejected.

The management of PepsiCo is also concious about quality standards of its products. So the quality inspectors of Pepsi Cola International take sample of different brands from the market, check it in the laboratory and send the results to PepsiCo. In case of any deviation from the standards the management of PepsiCo sends advice or strict warning to the concerend unit according to the degree of severness.

Other Tests

When the empty bottles are processed to clean and rinse a sample is taken to see any possibility of Caustic Soda. Light check is also done to see the presence of any solid particle in it. Moreover when the bottles are purchase they are also checked against the sets standards. The quality of glass, size of neck and size of bottom should be according to the given standards. Sugar which is an important ingredients of syrup, the quality of sugar is also checked when the sugar is recieved at the store from different suppliers. The sample is selected randomly. If the sample is not up to the mark, the other bags are also checked. If any deviation occurs, the shipment is rejected. Meanwhile the surface of bags is also examined to see any external problem with the lot. But there is no particular method of samlping.

Role Of PepsiCo:

PepsiCo is the franchiser of Shamim & Company and it has full responsibility for the quality of Pepsi Cola and other product line. So the franchiser has arranged a system through which they buy some bottles from the market which are produced by the Shamim & Company and it is checked in labortary of New York. This system also shows that the company has been trying to make a rigid quality control system in order to provide better product to its customers.

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Total Quality Management Benchmarking at Pepsi Cola

Pepsi – An Introduction

Introduction

PepsiCo, Inc., major producer of carbonated soft drinks, other beverages, and snack foods. Its beverage division, Pepsi-Cola Company, bottles and markets several popular brands of soft drinks in the United States and throughout the world. PepsiCo also owns Frito-Lay Company, the leading snack-food maker in the United States. PepsiCo is based in Purchase, New York.

PepsiCo’s soft drink products include Pepsi, Diet Pepsi, and Mountain Dew. Other beverages include Lipton Brisk and Lipton’s Brew iced teas, All Sport athletic drink, and Aquafina bottled water. Frito-Lay products include Lay’s and Ruffles Potato Chips, Fritos and Doritos Corn Chips, Chee-tos Cheese Snacks, Tostitos Tortilla Chips, Rold Gold Pretzels, and Grandma’s Cookies.

Early History

PepsiCo traces its origins to 1898 when Caleb Bradham, a pharmacist in New Bern, North Carolina, created a curative drink for dyspepsia called Pepsi-Cola. Pepsi-Cola, later referred to simply as Pepsi, was a mixture of carbonated water, cane-sugar syrup, and an extract from tropical kola nuts. To sell his product, Bradham formed the Pepsi-Cola Company in 1903. In addition to selling the drink at drugstore counters, Bradham bottled Pepsi for sale on store shelves. At this time, bottling was a new innovation in food packaging.

However, due to major increases in the price of sugar, Bradham began to lose money on Pepsi, and in 1923 he filed for bankruptcy. The Craven Holding Company of Craven County, North Carolina, purchased the company’s assets. In 1931 Charles G. Guth of the Loft Candy Company in New York City purchased Pepsi-Cola from the holding company. Guth had difficulty getting the business going again, but he increased sales by selling larger bottles at an unchanged price. By 1933 Pepsi-Cola was sold by 313 franchised U.S. dealers; bottled in the United States, Cuba, and England; and sold in 83 countries.

PepsiCo’s snack-food business dates from 1932 when ice-cream seller Elmer Doolin of San Antonio, Texas, developed a business idea after eating a package of Mexican-made fried corn chips. He purchased a recipe for the chips and established the Frito Company in 1932. Originally, Doolin produced Frito’s corn chips in his mother’s kitchen. He later mechanized production and moved operations to Dallas, Texas, in 1933. Around the same time, Herman Lay of Nashville, Tennessee, developed a business distributing potato chips made by an Atlanta manufacturer. In 1938 Lay bought the manufacturing company, renaming it H. W. Lay & Company. The company prospered, becoming one of the largest producers and distributors of snack foods in the southeastern United States. The company made and sold many snack foods, but its best-seller was its brand of potato chips, known as Lay’s. In 1945 the Frito Company gave H. W. Lay & Company exclusive Southeast distribution rights for Frito’s corn chips, a market both companies hoped to expand nationwide. After continuing their close business association for over 15 years, the two companies merged in 1961 to become Frito-Lay, Inc., with headquarters in Texas.

Growth

The Pepsi-Cola Company, meanwhile, had changed hands several times and grown greatly since 1933. The Loft Candy Company merged with the company in 1941, keeping the Pepsi-Cola name. About this time, Pepsi became the second-best selling soft drink in America behind its chief market rival, Coca-Cola (popularly known as Coke). In 1948 the Pepsi-Cola Company began canning drinks in addition to selling them in bottles. Alfred Steele, formerly an executive with the Coca-Cola Company, became president of the Pepsi-Cola Company in 1950. Former amateur boxer Donald Kendall took over as company president and chief executive officer (CEO) in 1963 and began marketing Pepsi to young people in an advertising campaign called “The Pepsi Generation.” The company acquired another popular soft drink, Mountain Dew, in 1964. In 1965 the Pepsi-Cola Company merged with Frito-Lay, Inc., to become PepsiCo, Inc., based in New York City. As president and CEO of the newly merged company, Kendall later moved the corporate headquarters to its current home in Purchase, New York.

In 1972 PepsiCo struck a deal with the Union of Soviet Socialist Republics (USSR), allowing the company to distribute Stolichnaya vodka in the United States and to build soft-drink bottling facilities in the USSR. Pepsi thus became one of the first American products to be made and sold in the Soviet Union. In the late 1970s the company began to purchase fast-food chains. It acquired Pizza Hut in 1977, Taco Bell in 1978, and Kentucky Fried Chicken (later named KFC) in 1986.

The Cola wars

PepsiCo’s leading soft drink, Pepsi-Cola, and its chief rival, Coke, have dominated the soft-drink market for decades, although Pepsi has traditionally remained behind Coke. In 1950 Coke outsold Pepsi by 500 percent worldwide. But Pepsi’s aggressive advertising campaigns aimed at young consumers and major bottling and marketing deals made Pepsi a close rival to Coke by the 1980s. PepsiCo has also enjoyed great success with its canned and bottled Lipton brand iced teas, earning higher sales than the Coca-Cola Company’s Nestea products. Also, in the United States, Pepsi had virtually an even market share with Coke in the mid-1980s, when the Coca-Cola Company changed the formula for Coke. (It later reintroduced the original formula under a new name, Coke Classic.) However, as Coke regained popularity worldwide in the late 1980s and into the 1990s, it again became the global soft-drink leader. In 1996 Pepsi-Cola International, PepsiCo’s international beverage production and marketing division, suffered difficulties in Latin America, one of its most important markets. The company was particularly hurt by the loss of a bottling plant to the Coca-Cola Company in Venezuela.

Snack food Market Dominance

Many of PepsiCo’s other products continued to dominate their markets in the 1990s. Sales of Frito-Lay products accounted for about 40 percent of PepsiCo’s total profits. By the mid-1990s Frito-Lay products made up more than half of the U.S. market for snack chips, and the company owned eight of the top ten chip brands. In 1995 U.S. consumers bought the company’s original potato chip brand, Lay’s, at a rate of 4.5 kg (10 lb) a second. The company’s leading product, Dorito’s tortilla chips, was the best-selling salty snack (packaged) food in America in the mid-1990s. Salty snack foods include chips, pretzels, and nuts, as opposed to nonsalty snack foods such as cookies and cakes. In 1994 Frito-Lay began producing several baked and low-fat versions of some of their snack foods—such as Baked Lays potato chips and Baked Tostitos tortilla chips—which soon dominated the company’s sales growth.

Recent Developments

By the mid-1990s PepsiCo’s restaurant business consisted of 28,000 outlets worldwide, more than were owned by any other company. The company also supplied its own restaurants through a separate division, PepsiCo Food Systems (PFS). In 1997 PepsiCo sold PFS. Also that year, PepsiCo spun off its restaurant chains to form a new company. The move enabled PepsiCo to focus on its beverages and snack foods. In 2001 PepsiCo acquired The Quaker Oats Company, a food and Beverage Company.

In Pakistan, there have been consumed different types of soft drinks but Pepsi is the most frequently consumed soft drink. It is very much popular in the consumer; it has got big target market and is competing with the other companies of soft drinks. 10 units of Pepsi cola have been installed, in the different places of Pakistan i.e., Lahore, Multan, Gujranwala, etc., and working with the best utilization of their resources in the optimum way. Each of these units is owned by the different parties, which are strictly following the rules of the parent company. The company to made production has licensed each unit. These units have their own areas of selling and have different target markets. All these units are considered as separate firms, which are the franchisees of Pepsi cola international.

Pepsi in Multan

Shamim & Company

History

SHAMIM & Co. was established in 1967 as a private limited company. It started its business in 1968. Allah Nawaz Khan Tareen (Ret. DIG) got license of 7-up franchise and was producing only one product, 7-up. But in 1973, it became Pepsi Cola franchise. Now a day MD of SHAMIM & Co. is Alamgeer Khan Tareen son of Allah Nawaz Khan Tareen.

Total production of that plant was 600 crates per 24 hours. Now Factory has 5 plants, which can produce 110,000 crates per 24 hours.

In start Pepsi in Multan imported the material from USA & Ireland but due the problems of shipment, time and availability, Pepsi Pakistan made the plant in HariPur Hadar where they import the material from USA & Ireland. And now Pepsi in Multan takes Pepsi Concentrate from the HariPur plant.

Along with the concentrate, Pepsi in Multan also imports the Sugar from Sheikho Sugar mill & from Shaker Kunj. The bottles are manufactured by Tariq Glass in Lahore under licensed by PEPSI Pakistan. The gases which are used in PEPSI are made by Multan Factory itself but in case of shortage Factory buys it from Supreme Gas & Pak Gas. The caps and crowns are imported from Imran Cork, Mehran – Karachi and Wincloa – Lahore.

Introduction

In Pakistan, at present SHAMIM & Co. is the largest production unit out of 11 franchisees. SHAMIM & Co. covers the area of Southern Punjab which consists of Multan, Bahawalpur, Bahwalnagar, Dera Ghazi Khan, Sahiwal, Khanewal, Rajan Pur, Taunsa, Okara, Rahimyar Khan and Layyah. The company is properly serving all these areas with quality products.

Honors

In Pakistan, SHAMIM & Co. is in the list of top three out of eleven showing financial and sales growth according to their relative volume size basis. When franchise cross a certain volume, plant is classified as, “Mega Plant Status”. SHAMIM & Co. has achieved this status in 2000 and 2001. Also it has ISO 9002 Certification and for year 2005 Shamim and Company won the award of best quality unit among the eleven 11 units in Pakistan.

Mission Statement

“To earn profit by meeting the customers needs with quality products”.

Organization

Managing Director

He is the owner of this company and final operational authority to manage all departments of the company. All departments’ heads are responsible to report him all about their performances and matters.

General Manager Sales

G. Manager Sales is responsible for the performance of his department and to achieve the objectives assigned to him such as marketing, sales, distribution. To carry out his duties more efficiently he has four Regional Managers, 15 Area Sales Managers.

General Manager Operation

He is responsible for the whole administrative, shipping, workshop related activities to smooth on the factory operations without any hindrances.

General Manager Technical

He is unlike Sales department performs key role as to manage Production Department producing quality Products as per need of the sales department. Quality Control Department also works under him.

G. Manager Finance

Finance, Accounts and MIS departments work under his control. He is responsible to make major company financial policies to meet the needs of the each and every department regarding budgets etc.

Organizational Chart

Global strategy

Pepsi has divided the total international market on the basis of taste constituting into three zones.

Asian zone European zone African zone

Pepsi is using the licensing strategy to go abroad. SHAMIM & Co. is also a Licensee.

Competitive priorities

“The competitive priorities are the operating advantages that firm’s processes must possess to outperform its competitors.”

Shamim & Co. has the competitive priorities of high-performance design and consistent quality.

High-Performance design

Actually Pepsi is getting the competitive edge in our region on the basis of its quality and the quality is its taste. Through a complete marketing research they found that sweet taste is liked more by this region. That’s why in Pakistan Pepsi is dominant soft drink and it has almost 75% shares in this market. On the other hand when we look internationality then Coca Cola is the leading company. So Pakistan is a big market for the Pepsi, where Pepsi is generating a lot of revenues.

Consistent Quality

Another major and the strong aspect of the Pepsi in Multan is that they are producing a consistent quality according to the PCI standards. The low quality bottles and the damaged bottles are not dispatched towards the market. Pepsi has a lot of checks and balances on its output level.

MANUFACTURING AND SERVICES STRATEGIES

Make-To-Stock Strategy

In Pepsi, Make-To-Stock manufacturing strategy is used. Bottles are produced in a standardized process because the competitive priority is consistent quality. Firstly, marketing department forecasts the demand then according to this forecasting MPS is made and after making bottles Pepsi distribute these bottles to the market.

DEPARTMENTALIZATION

As it is a formalized company therefore there is a hierarchy of employees and the division of departments in the organization. Following are the departments working in the organization.

Production Department Administration and Personnel department Sales/ marketing Department Finance Department Shipping Department Purchase Department Excise Department Computer Department

Each manager of a department is responsible for overall working of the department. A manager has an assistant manager and after this there are shift in charge in production and supervisors in sales. They control the activities of operatives.

Brief introduction of the working of these major departments

Production department

As we can see with the name of the department the working of this department is to control the production process i.e., to get raw material and process them and convert them into finished goods.

Administration department

The major function of this department is to manage the employees and to made recruitment of new employees. Assign them their according jobs. And government affairs if employees are working effectively or not and what are the government recent policies

And what is the impact of these policies on the organization. These are the few matters where administration plays its role.

Publicity problems

Some government policies directly affect organizational expenses like the tax on different campaigns that is tax on cap, banners, shirts, and as many taxes on different publicity methods about which organization come tow know at the end of the year.

Sales/marketing department

The marketing department of this organization is assigned to make public dealing. The marketing department is responsible to make advertisements of the company products and get them sold. Advertise through road site Painting, Wall Chalking, Billboard, TV adds etc. They are given yearly sales targets and they are liable to achieve that. They use different schemes and offer different discounts etc. to achieve those targets. Schemes like:

Ø Prize Winning Schemes

Ø Pepsi Ramzan Offer

Ø Haj scheme

Ø Omera scheme

Ø And many more schemes

Finance department

This is one of the most important departments of this organization. This department makes the financial plans of the organization; they analyze their resources and then compile other reports and give the whole budget the organization can afford. Another job of this department is to make the complete record all financial and non-financial transactions made inside as well as outside the organization.

Purchase department

The whole processing of production department is based on the availability of raw material and all the dealing regarding raw material is under purchase department. They made purchases from their contractors i.e., bottles, caps ingredients etc.

Computer department

Pepsi-Cola uses a software package (Road Net) to facilitate the design of efficient routes and schedules for the delivery of bottled and canned products to customers assigned to a given location. In order for automated routing and scheduling to achieve maximum benefit, however, the set of customers assigned to each warehouse and bottling facility must be appropriate. During the course of this project the students developed a procedure based on cluster analysis to assign customers to bottling facilities and integrated this analysis into a Geographic Information System.

PRODUCTION PROCESS

Water Treatment Plant

PEPSI Bottles Filling Process

Purchasing and washing of bottles

First step regarding the production is the purchasing and washing of bottles. Mainly company use the bottles returned from the market but if it needed more bottles, then these are purchased from the glass company, Lahore.

These bottles are placed on conveyer and washed through an automatic plant. Caustic Soda and boiled water is used for washing of bottles.

Water Traeatment

Raw water is treated to remove its hardness. Here raw water with the Lime, Feso4, and Chlorine comes to the Coagulation Tank where the initial sludge is removed then this water is moved to Buffer Tank where it is kept for a certain period in order to stable it. Then this water comes to the Sand Filter and passes through the Sand and Gravel bed, and then this half treated water comes to the Carbon Filter and passed through the Carbon and Gravel bed for more purification. After that it is moved to the Purifix Carbon Filter and then to the Spool Polisher where the filter papers are used to remove the sludge and then to Water Polisher and then to Ultra Violet Filter where Ultra Violet rays passes through the water in order to eliminate the future growth of bacteria and lastly this treated water passed through the Thread Type Filter. After passing through this complex process water is completely free from sludge and bacteria and other hazardous waste.

After that this water comes to the Water Softer Tank and passed thorough the Gravel Bed and this soft water is used for the syrup making.

Preparation of Simple Syrup

In the sugar weight room sugar is weighted for different brands, because each brand requires different quantity of sugar, then this weighted sugar is passed to the syrup storage room, where the sugar and water in equal quantity processed in Pasteurizer Tanks, and heated up to 85 C where Activated Carbon is used to remove the bacteria, and Chlorine and TSP (Tri Sodium Phosphate) used to remove the smell and color of the sugar. Chlorine and TSP is also stored in different tanks. After that this mixture of water and sugar is cooled down up to 20C in order to prevent from the further growth of bacteria, after that in this mixture Concentrate of each brand is added as per requirement.

Washing of Bottles

The empty bottles that come from the market are brought into the washing room of bottles where different employees first check the initial damages to the bottles. Damaged bottles are screened out from the lot. Only the acceptable lot is allowed going towards the bottle washer machine. The bottles remain 45 minute in this washer machine so that only the good quality bottles that are free from sludge and breakage can be passed to the filling room.

Filling of Bottles

Mixing of CO2 Gas in Syrup

Syrup is sent to carbon coolers, Ammonia, Carbon Powder and Carbon Granular are mixed in the syrup.

In the filling room the syrup and CO2 comes from syrup and CO2 room. From Carbon cooler syrup goes to the filler and from other side empty bottles and then crown cock or cap cocks are fixed on the bottles. Here operator looks after the production process.

Filled bottles are then passed thorough light room where quality of bottles is checked. Here under filled or, over filled bottles or dirty bottles are separated. There are two light rooms and in each room one employee is placed to trace out the dirty bottles.

After passing through light room the code is printed on the bottles, which contain the manufacturing date, machine number and time of manufacturing and the batch number.

After all this checking process bottles are placed in the crates. The whole process of production is automatic. Only supervision is required. Then these crates are sent to the output warehouse.

QUALITY CONTROL

It has become crystal clear that high quality products have a distinct advantage in the market place, that market share can be gained or lost over the quality issue. Therefore quality is a competitive priority.

Quality is important due to the following reasons:

• Cost and market share

• Company’s reputation

• Product liability

• International implications

SHAMIM & COMPANY (PVT) LTD takes effective measures for the quality control. Production of the company is according to the standards set by PCI. So the company is very much concerned about quality. Quality of raw material as well as of end product is checked.

Following are the main steps taken by the company for quality control.

Testing of Raw Material

Raw material used in production, comprises of the following items.

• Concentrate

• Sugar

• Treated Water

• Empty Bottles

• Carbon Dioxide

• Crown

From the above items, previously the franchiser from USA provided concentrate. Now it has plant at Haripur and SHAMIM & COMPANY (PVT) LTD purchase the concentrate from there. Because the franchiser provides concentrate, so there is no question about its quality. All other raw material purchased by the company itself.

Sugar Testing

The company from sugar mills purchases sugar. After the arrival of sugar at the plant, it has to pass through a strict quality check. It should be free from moisture.

First of all supervisor checks the quality of sugar. After this checking, a randomly selected sample from sugar bag is sent to laboratory for testing. After this testing, if the quality of sugar is according to the standards, then this sugar is stored for further processing. If the sugar quality is not up to the mark, then it is sent back to the sugar mill.

Water Treatment Testing

The company has four containers to meet the requirement of water. The water is treated for the use in final processing. At different stages, different treatment tests are done.

These tests include:

• Upper top test

• Sand filter and carbon purifier test

• Water softness test

Company also keeps the record of these tests. If some abnormality is observed by the shift in charge, then he stops the supply of water from the container. The supply of water is made from other container. These containers are also washed at regular basis.

Syrup Testing

Mixing of sugar and water into concentrate produces syrup. This mixture is treated at 90oc and then it is stored in the tanks. This is called simple syrup. This syrup is also tested in the lab. Then carbon dioxide and ammonia are mixed into the syrup. Now this is final syrup this is also tested in the lab. If this syrup is not according to standards, then new syrup is prepared for production.

Finished Product Testing

When bottles are filled, a chemist also takes the sample and checks the quality. Here preservation and ingredients ratios are also checked. If any deviation from the standard is found, the whole batch is drained before going in market.

These finished bottles are also passed through light room to control the quality. Here if the bottle is low filled or dirty, then it is sorted out. The quality of glass, size of neck and size of bottom should be according to the given standards.

Internal Audit

The firm has hired an internal audit team. And the purpose of this audit team is to make periodic inspection of output after every 30 minuets. And if they find any laziness from the employee’s side they immediately inform to the operation manager, so that right action can be taken.

External Audit

Similarly there are some external auditors from Dubai, they take the random sample of bottle from market and check the quality of beverages according to their standards. In the past 4 to 5 years the Pepsi Multan has proved good quality and got a lot of reward from international auditors.

Pepsi cola international also plays an important role in maintaining the quality. Sample from different markets at different selling points at different times, are collected and quality of these samples are checked.

Coding is also done on the caps of the bottles. In this coding manufacturing date, machine number and time is printed. So from the above testing, we can conclude that the company has very rigid quality control system.

Capacity

“Capacity is the limiting capability of a productive unit to produce within a stated time period, normally expressed in terms of out put units per unit of time.”

This is actually the intensity with which a facility is used. This intensity is increased through overtime. Other way of increasing the capacity is to engage in subcontracting when it is feasible.

In Pepsi, the capacity measure in out put form is the number of crates produced. There are two production units having different lines. The first unit contains 3 lines and allocated for 250 ml. Pepsi, 7UP, Dew & Marinda. The second unit contains 2 lines and produces 1 & 1.5 litre bottles. These lines are flexible in a sense that through one line you can produce multiple brands having a set-up time of 2 hrs. They are not fully utilized. The capacity of one line is 1100 bottles per minute but it is being operated at 800 to 900 bottles per minute. The reason is that, the bottles move very fast that may cause serious accidents by breaking into small pieces. There are 3 shifts working in Pepsi cola. The total capacity of 5 lines is 160,000 crates per day. But the average utilization of 5 lines is 100,000 crates per day in peek season.

Planning Strategies

Chase Strategy

A chase strategy matches demand during the planning horizon by varying either (1) the workforce level or (2) the output rate.

Pepsi is also following the Chase policy. When higher production is required in the peak season, company hires the new workers, and during low production the workers are fired from the company to prevent from unnecessary cost. Company also tries to increase demand through advertising, price cuts and by giving different incentives.]

FORECASTING

Planning and control for operations requires an estimate of the demand for the product or the service that an organization expects to provide in the future. Since forecasting should be an integral part of planning and decision making, the choice of a forecasting horizon (a week or a month, for example), a forecasting method with desired accuracy, and the unit of forecasting (dollar sales, individual product demand.) should be based on a clear understanding of how the output of the forecast will be used in the decision process.

SHAMIM & COMPANY (PVT) LTD uses the historical data for forecasting demand. As the company has seasonal business so the demand is high in the month of March, April, May, June, July, August and September. Sixty percent sale of the company takes place in these months. This is the peak season for the company.

Company makes the sales forecast on the basis of historical data. For example, if a company wants to forecast the sale for June 2005. They will take the data of last five year in order to forecast the sale for June 2005. They also take into account the current trend factor.

Level of Forecast

The Pepsi cola forecast the demand for their products on aggregate level. Then they forecast demand for Pepsi, 7up, Mountain Dew and Miranda individually.

Unit of measurement

They forecast the demand in crates instead of bottles. Pepsi normally forecast the demand in 250ml.

Forecasting error

It is difficult to reduce the error of forecast demand. They say that the six to eight months are required to install a new plant. And they lose the market for this particular period.

Inventory Management

Inventory is very important to every company because it helps the company to respond quickly to customer demand, which is an important element of competitive strategy. The more effective a company’s inventory system is helped full in manage the company’s resources.

In SHAMIM & COMPANY the inventory is divided in to two main categories:

Critical material Non-critical material

Critical Material

Critical material is that which is directly related to the production so management gives full concentration to critical material to avoid irregularity in operation. The critical materials include:

CONCENTRATE SUGAR CO2 GAS EMPTY BOTTLES CROWN CORK CAUSTIC SODA

The store provides a daily stock report of critical material with balance. If that material is reach at reorder point then they write that material in the daily stock in the column of urgent. If any material is going to be reordered, it is highlight with red pen. The procurement manager physically checks the stock and place order. They are managing high inventory in which order for concentrate is placed for 3 months and the order for the rest of the material is placed for 1 month.

The reason for maintaining high inventory is;

Customer satisfaction, to prevent from stock-outs and back-order situation Low ordering cost Labor and equipment utilization Low transportation cost

Non-Critical Material

In Pepsi cola the non-critical material are those material which is not directly related to the production. The storekeepers inform the procurement manager. When there is need. The non-critical material consists of stationery, Greece, and supplies etc.

Selection of Supplier

The co. purchase material from those suppliers, which provide the material at least cost, on time delivery and meets the specification of the quality control department

In start Pepsi in Multan imported the material from USA & Ireland but due the problems of shipment, time and availability, Pepsi Pakistan made the plant in HariPur Hadar where they import the material from USA & Ireland. And now Pepsi in Multan takes Pepsi Concentrate from the HariPur plant.

Along with the concentrate, Pepsi in Multan also imports the Sugar from Sheikho Sugar mill & from Shaker Kunj. The bottles are manufactured by Tariq Glass, Toynasic and BGL under licensed of PEPSI Pakistan. The gases which are used in PEPSI are made by Multan Factory itself but in case of shortage Factory buys it from Supreme Gas & Pak Gas. The caps and crowns are imported from Imran Cork, Mehran – Karachi and Wincloa – Lahore.

Distribution

In Shamim & company, major item of inventory is finished product. There are two ways to distribute that finish inventory, the first method is direct and second is indirect method. In direct method they provide crates of bottles to their dealers at the required destination through their own transport, in indirect method the dealers have their own transport for distribution.

PEPSI is just one link in a customer value delivery system that includes thousands of dealers. It is a winner in this part of the world because they have superior dealer networks. Also the wholesalers and retailers involved are doing well because PEPSI supplies superior beverages. PEPSI also focuses on placement of their product such that the consumer can buy a PEPSI from nearby location. PEPSI also takes immediate action in delivering its products to market. Overall PEPSI is focusing on fastest delivery and great assortment.

PEPSI Multan is obtaining strong trade cooperation and support from resellers. The marketing department commands unusual cooperation from resellers regarding displays, shelf space, promotions and price policies.

“ The bench marking is a continuous process of comparing a company’s strategy, products and processes with those of world leaders and in best-in-class organizations in order to learn how they achieve excellence and then setting out to match and even surpass it.”

We will compare these two companies in regard of shares. The shares can be described in two ways:

Ø Market shares

Ø Volume shares

The market share of a company represents the portion of accounts that the company holds from the 100% accounts of the market. The market share distribution of Pepsi and Coca-Cola is more than 80% and remaining respectively. For Instance if the total market comprises of 100 consuming accounts then 80 accounts are being served by Pepsi and rest are being server by Coca-Cola and others. Pepsi has been focusing to increase its market share, which represents the long-term approach of organization because majority of the customers of the Pepsi are low volume purchase and if someone will switch towards the other brand then it would not be a big loss for the firm. But on the other hand Coca cola is focusing on the short-run approach, it is dealing with the institutional customers, which are high volume purchaser. But the major disadvantage of this approach is that if Coca-Cola will lose any one customer among these 20 then it would be a great loss for the firm but in case for it.

The volume share of a company represents the portion of sales volume that the company holds form the 100% sales volume of the market. The volume share distribution of Pepsi and Coca –Cola is 65% and 34% respectively. For instance if total market demand is 100 units then Pepsi is supplying 65 units while Coca-Cola is supplying 34 units and remaining 1 unit is supplied by other beverages companies of Pakistan.

In 1970s Pepsi was the follower and Coca-Cola was the leader here in Pakistan as well. At that time Pepsi used to benchmark the Coca-Cola in order to prosper and progress. But after 1970s Pepsi stopped benchmarking strategies and procedures of Coca-Cola and adopted an idea of Out-of Box thinking.

Thinking Outside the Box means thinking beyond the parameters of human consciousness and experience - to see beyond the norm - to be a visionary - to activate your DNA. We exist inside the box - the physical plane - but we soon evolve our conscious awareness back to its source of creation - outside the box.

Are you trapped inside the box - the emotions of the game?
Thinking 'outside the box' means balancing lower frequency emotions - fear, anger, etc.
With higher frequency emotions and therefore not being controlled by your emotions.
Let it all go ... it's just an illusion in time.

………

Humanity is evolving out of the box and into the light of creation.

What PEPSI found out from out-of-box thinking?

Pepsi got following findings from this idea:

Ø Cricket is the most Popular game in Pakistan.

Ø Pakistan is an immature market.

The tactics that Pepsi derived from above ideas are:

It is an admitted fact that there is a craze of cricket in Pakistani Nation irrespective of age factor. So the Pepsi thought to take the benefit from it and made a contract with PCB in mid 70s. This created a fantasy in the minds of people and market shares of Pepsi Cola started increasing. It gave real boost up to repute of Pepsi in world-cup 1992 and in very short span of time; Pepsi was able to double its sales.

In view of the lack of knowledge and immature market of Pakistan Pepsi adopted the aggressive strategies of distribution and advertisement. This also was proved to be an effective move towards the growth of the company. They are using almost all modes of advertisement and are using them extensively right now such as:

Ø Electronic Media

Ø Print Media

Ø Display Media

It is the task of the sales and marketing officer of Pepsi Cola that whenever and wherever a departmental store will open they have to capture it and have to convince the shopkeeper to make an agreement by meeting his requirements.

Benchmarking PCI

As we already mentioned that in sub-continent Pepsi is the leader so here in Pakistan Pepsi is not benchmarking Cola-Cola’s standards rather Coca-Cola is benchmarking Pepsi here such as in pricing, advertisement (Celebrity Hiring) and aggressive distribution. Pepsi benchmark its parent company for technical, quality and for human resource considerations.

Quality issues

Shamim & Company infect adopt the standards of PCI such as about the proportion of ingredients. Such as the standard for CO2 in 7’up was set 3.5 to 3.9 but to become more efficient in quality issues the Shamim and Company redefined it as 3.6 to 3.8. However the ideal standard for CO2 is 3.7. Similarly for the Marinda they refined the standard for getting much and much closer to the ideal standard.

Technology

Pepsi in Pakistan always benchmarks its parent Company for the sake of technology improvement. For instance they are going to start a new plant in Lahore, which would have the capacity to fulfill the total demand of Lahore district. And it would require only 3 operatives to operate this plant.

Celebrity Hiring:

In our culture cricketers and film stars have much influence on people. Pepsi is using both the vehicles to advertise its brands. It has established the contract with prominent film star Reema as a brand representative for Pepsi. Similarly contracts have been established with Inzamam-ul-Haq and other cricketers.

Employee policies

Earlier Pepsi was not focusing too much on employee’s benefits and facilities. Then it adopted the idea that “result and rewards have a positive co-relation.” Shamim & Company took this idea from PCI that if employees and satisfied and motivated towards the achievement of the Goals only then organization can better grow. In early 90s Pepsi adopted a new benefit plan for its employees and management. Now in employee in the marketing department has a car, having the medical facilities, insurance and a good compensation. So these policies regarding the employees helped the organization to achieve its target related to sales, growth and image of highly committed organization.

Collecting Feedback from customers

Actually, Pepsi is using two ways to collect the feedback from its customers.

Ø Direct Method

Ø Indirect Method

In direct method they collect feedback from its distributors, business customers and retailers about demand, market situation, consumer behavior and on other issues through its Sales Information System (SIS). For example they take vehicle plan from the distributors.

And Pepsi measures the performance of its distributors and other customers through collecting the data about

Targets Inventory Level Repute Daily, monthly and yearly sales Report

This method is specifically used to judge the consumer behavior. In this method Pepsi uses the services of ACNELSON Company, which is basically a biggest and authentic most research organization in Pakistan.

They use two vehicles focus and employees policies to incorporate the quality culture. For the urgent and most important issues they make employee’s policies and make sure these policies are being followed with considerate supervision. And for less urgent issues they use focus strategy and arrange lectures, presentations, conferences and excessive training programs.

Pepsi has NO agreement with Coca-Cola on pricing and other strategic issues. And the major reason of recent increase in prices has been reported to be the revision of tax policy of the Government.

ISO 9000

Now the situation has been changed. Products of low standards are not acceptable in international markets. These standards are ISO-9000 i.e., International Standard Organization. Now as the world has become a global village, therefore, there is a very tough competition among the companies. Especially for the companies of developing countries, they have to do much more smart work than the companies of developed countries because they have strong economy and their products are widely acceptable in the international market. For this purpose almost all organizations are doing struggle for getting ISO-9000 certificate. Shamim & Company (PVT) Ltd is one of those Pakistani organizations that struggled for ISO-9000 and awarded. They have been awarded ISO-9002 certificate.

The management and labor of Pepsi is committed with their responsibilities. The evidence of this the company has certified as international standard organization. They had to fulfill the 20 clauses of ISO 9000. In this way they got ISO 9002 certificate. The company is franchisee so; they have no authority to design a product.

They up date their records on daily basis. In Pakistan no one have authority for inspection for ISO 9000. The company has selected SGS Malaysia for inspection of their records. This is a continuous process the auditors come after six month and check the records.

SWOT Analysis

1- Strength

Activities the firm does well or resources it controls are called strength. Resources that a company contains, size of organization, size of market, loyalty of the organization’s products, sales point of product of the company shows the company strength.

The strength of PEPSI lies in the loyalty of the product, their market share, size of market, having numerous sales points and efficient delivery system.

2- Weaknesses

Activities the firm does not do well or resources it needs but does not possess. Such activities that a firm does not perform or not have some resources those other competitors have.

Locally, PEPSI is enjoying its position in the market. Internationally, PEPSI faces some tough competition from Coca-Cola. Their weakness is the lack of relationship marketing in some parts of the world. And also in Pakistan they are facing some serious problems in building the relationship with institutional customers.

3- Opportunities

A combination of favorable circumstances or situations for organization’s product/s such as loyalty of customer about your products, social environment, size of target market, size of organization, advantages over other competitors etc.

Opportunities are coming in the market day by day in the shape of new retailers. PEPSI has a big research department; they try to capture each new retailer who comes in the market. Pakistan population size is rapidly increasing with the passage of time so opportunities are there for Pepsi to enhance its sales volume more than others.

4- Threats

Unfavorable circumstances that a company faces time by time to achieve its goals are called threats. Some times small companies introduce the same products with low quality and low price that the company did not produce.

Locally, PEPSI stands second to none. Internationally, Pepsi is facing heavy competition from its rival Coca-Cola. Coca-Cola is focusing global market while PEPSI is somehow lagging behind. The situation can become a serious threat to PEPSI globally.

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Code.

Reporting to the Compliance Officer:

Telenor ASA

Compliance Officer

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E-mail: compliance@telenor.com

Tel.: +47 678 90 000

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Therefore conclusively different packages that are offered is the main attraction to all the people. Quality of service was the second most important attribute. Also increasing one’s balance through an incoming call and the prompt response of employees at the Telenor call center add value to the services provided by this company. What makes Telenor popular is the service quality, the value added services and the affordable packages.

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Al-Ghazi Tractors Ltd. Production and Operations Management

Al-Ghazi Tractors Ltd. is located in rated among the Top Companies of Pakistan Dera Ghazi Khan, has been The market leader of tractors in Pakistan Al-Ghazi consecutively for the years 1994, 1995 and 1996 by the Karachi Stock Exchange. Al-Ghazi Tractors was conferred the Management Excellence Award by the Management Association of Pakistan for demonstrating the best Corporate Performance in the Engineering Sector of Pakistan for the years 1995 and 1996. Al-Ghazi Tractors is the first Company in the Automobile sector of Pakistan to have achieved the highest quality award “The ISO 9002” registration that gives Al-Ghazi Tractors Ltd. the international recognition as Producers of Fiat and New Holland Tractors.

With a strong dealer-network dotting the country form Karachi to Gilgit with over 300 service workshops to attend to the 100,000 Fiat Tractor Models 480-S and 640 and newly introduced model New Holland operating in the country. Al-Ghazi Tractors today is the market leader with bookings exceeding 50% of the total tractors market in the country. The company is capable of producing 15,000 tractors on a single assembly line.

Company was incorporated in June 1983 as a limited company. The date of commencement is September first 1983. Management control at that time was in the hand of Habib Group as a result of joint venture between Pakistan Automobile Corporation (PACO), Habib Group, NDFC and Fiat of Italy.

On the expiry of seven years term of Habib Management control was taken by PACO in September 1990. The company was privatize in September 1991 taken over on December 8th 1991 by Al-Futtaim Group of Dubai (UAE) with 46% shares with the help of Fiat’s 5% stake.

LOCATION

Decision about location about operations of any organization is a most critical factor in the establishment of the organization. Because during the establishment many locations are identified and only those are selected which are more suited for the organization. For manufacturing operations, the decisions about selection of location are of much importance. Because it has a much impact on operating cost, profit and price at which products are offered to the customers. As far allocation is concerned the company’s strategy consists of selecting the location from which the potential market will be served. The location of facility involves the commitment of resources to long range plans. Locations take on even greater significance because those plans represent the basic strategy for assessing markets and may have significant impact in revenue, cost and service level to customers and clients. Technological constraints eliminate most of possible locations. Location of industry is selected on the basis of:

Ø Availability of inputs to products or raw materials on cheap prices and maximization of profits.

Ø Proximity to potential customers to be served.

Ø Proximity to required labor for performing the operations.

Ø In plant location objective is to minimize the sum of all costs, not only current but also long term costs.

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. Total land area covered by the plant is approximately 100 acres. AGTL select D.G.Khan because Govt. gave option to AGTL to select either D.G.Khan or Khushab. Both were tax free zone. The location had been selected in early 80’s during the period of late President Of Republic Of Pakistan Gen. Zia-ul-Haq when it was declared free industrial zone for five years.

FACTORS

Due to following factors the on was selected at the above location.

TAX FREE ZONE

To promote the back-word areas of Pakistan certain areas were announced as tax free zones in all provinces. The district of Dera Gazi Khan was one of them. Habib and group decided to establish a tractor factory in this region. A factory “Al-Ghazi Tractors Ltd.” was established by joint venture of PACO, HABIB GROUP, NDFC, and FIAT of Italy in September 1983.

FAVORABLE LABOR CLIMATE

The labor plays an important role in the selection of the labor-intensive company. So the selection of this location was also favorable labor for construction of the factory.

TAXES AND REAL ESTATE COSTS

One important factor was that the real estate’s cost was too much lower as compared to the to other areas of the country. That was the other main reason for the selection of the site.

CONSTRUCTION COST

The major cost involved in any organization is in the shape of the construction costs. That took a large amount. But at that time the labor was available at the cheaper rate. Due to which the site was selected at that place.

PROXIMITY TO MARKETS

It is located in the district Dera Ghazi Khan of province Punjab whose boundaries attaches to all four Provinces of Pakistan, especially the most fertile areas of Province Punjab and Sindh. So, it has more proximity to the market, as Dera Ghazi Khan and Multan Divisions are famous of being Cotton Belt.

AVAILABILITY OF UTILITIES

The basic utilities are easily available at the place. The facility of fax, electricity, Sui Gas and telephone was provided by Govt. at that time to encourage the partners to establish plant there. So these utilities proved much helpful to contact with the global market at every moment is a key to success. The transportation facility is easily available at factory place.

FACILITIES PROVIDED TO ATTRACT THE EMPLOYEES

AGTL has the following facilities for his staff. Which are considered to be important.

HOUSING FACILITIES

It is having housing facilities for 126 family homes and quarters for executives and workers. The population of the staff colony is approximately 500.

MOSQUE HOSPITAL AND SCHOOL FACILITIES

There is a Mosque, Hospital with ambulance and AGTL primary school for the children of staff residing in the colony. AGTL is having a school bus for pick and drop services to school and college for the children of staff studying in Dera Gazi Khan City.

UTILITY FACILITY

Clean water supply with U.V filter and private electric generator for Un-interrupted power supply for the staff because the weather in summer is much hotter here.

RECREATION CENTERS

Recreation centers for executives, workers, children and ladies with indoor games TV, Videos, Dish Antennas and other facilities are available at AGTL staff colony.

EMPLOYEES

There are 536 employees which, are working in the factory.

OFFICES

Head office Karachi

Factory D.G.Khan

Marketing area Multan

Lahore

Peshawar

Islamabad

Sukhar

PRODUCTION DEPARTMENT

Al-Ghazi Tractors Limited its own production department where they assemble the tractors in the production department they have 450 employees. The plant for assembling the tractor is installed by Italians. It is fully well equipped with the advanced technology. The material used for assembling the tractor is purchased by the head office Karachi. Then they sent to the factory. The vendors for supply of material are near about 360.

MAIN OBJECTIVES OF AGTL

· Main competitive priority of AGTL is the quality. other objectives are as follows

· To achieve the production capability so that the cultivator may get his tractor readily.

· To pay special attention to the quality of the finished products to get customer satisfaction.

· To provide prompt and effective after sales services and tactical advice together with adequate supply of spare parts.

· To contribute towards national self reliance in engineering industry.

· To promote industrialization in remote areas of the country.

· To achieve maximum localization of components.

“Inventory is a stock of anything held to meet the future demand”.

It is one the function for which management pays much of attention. Often an amount is fixed for inventory level. Keeping inventory to appropriate level is very difficult task. Because a huge part of firms capital investment is dedicated to inventory. All organizations have some type of inventory planning and control system.

Al-Ghazi Tractor is manufacturing organization, the management gives more emphasis on raw material inventory and mostly inventory is held in terms of input products and raw material. Most of the inventory is treated as dependent demand for the assembling. Here there is a separate Material Management department.

TYPES OF INVENTORY MANAGEMENT

The inventory can be divided into two broad categories.

1. Raw Material Inventory.

2. Finished Goods Inventory.

RAW MATERIAL

The company needs for the purpose of the production by the company can divide the items, which come under the raw material, into two broad categories.

a) Imported material

b) Local material

1). IMPORTED MATERIAL

The main items, which are imported by this company, are the gear cases and Engine and the critical items, which are necessary for the purpose of the production by the company. The company imports these items from Italy, Turkey.

The raw material fall under this category for

a) Model 480-S is 15%

b) Model 640 is 24%

2). LOCAL MATERIAL

AGTL is having 359 vendors from all over the Pakistan. These vendors are responsible for providing the high standards products to the AGTL. This contains the main portion of raw material. These are also categories according to the Models

a) Model 480-S 85%

b) Model 640 76%

METHODS FOR INVENTORY MANAGEMENT AT AGTL

REORDER POINT

At any time the raw material of 200 tractors is present in the factory premises. Whenever the material falls below it a fax is sent to Head Office for more raw material. The reorder point in the company is the raw material of 200 engines of the tractors.

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:

A category includes those items that require largest money investment about 80 % of the overall investment while they account for only20 % only. It requires continuous review of the items included.

It includes the following items

1). Engine of tractor

2). Gear box of tractors

3). Imported items

Category B:

B category is the second important category includes those items that require second largest money investment about 15 % of the overall investment while they account for only 30 % only. It requires periodic review of the items included.

It includes the following items

1). Items used in transmission

2). Nozzles

3). Tires

Category C:

The last category is C category includes those items that require least money investment about 5% of the overall investment while they account for 50 % of all items. It includes items, which are prepared by local vendors.

FINISHED GOODS

There is no inventory being utilized by the company for the purpose of the finished products. The reason behind this strategy is that the tractors are sent to dealers or they may receive themselves. So the company is having the zero inventories for these items. The company is fulfilling the orders, which are coming to them.

“A forecast is the prediction of future events used for the planning purposes”.

Forecasting has an important role in scheduling all the operations of the organization. Forecasting is based on qualitative as well as quantitative methods. Management needs accurate forecasting of demands to make schedule of all operations and to cope with lead-time of different and reduce inventory levels. Accurate forecast allows schedulers to use machine capacity efficiently, reduce production times, and cut inventories.

There the four forecasting techniques are available for the purpose of the forecasting of the demand, which are as under.

1) Qualitative techniques

Ø Sales Force Estimate

Ø Executive Opinion

Ø Market Research

Ø Delphi Method

2) Quantitative techniques

Causal Techniques

Ø Regression

Ø Correlation

Time Series Method

Ø Naive Method

Ø Simple Moving Average

Ø Weighted Moving Average

Ø Exponential Smoothing Method With trend & Seasonal Effect

FORECAST AT AL-GHAZI TRACTOR LTD.

The sales data of sales of Fiat tractors of Al-Ghazi Tractors Ltd. for the last thirteen years is given below.

YEAR. PRODUCTION SALES

UNITS. UNITS.

1983-84 7683 8140

1984-85 9832 9351

1985-86 8500 8178

1986-87 7197 8101

1987-88 6604 6679

1988-89 8167 8189

1989-90 6607 6621

1990-91 5664 5734

1991-92 3327 3402

1992-93 6182 5955

1993-94 5547 5798

1994-95 6415 6420

1995-96 6617 6617

1996-97 4939 4701

From the above data we see that there is no concept of time series here. Its reason is because sales of tractors are through Agriculture Development Bank of Pakistan. Which account for 98% while only 2% sales are on cash. The farmers get loan from bank to buy a tractor because it is unable to buy it on net pay. The Bank at the end of each month initiates a order to HEAD OFFICE, which is situated in Karachi. However in peak season from JANUARY TO MARCH during harvesting season an order may be place after fifteen days. The orders are filled by the company in the during the next month of receiving the order. If the demand exceed the schedule than it is filled by overtime working.

There is no forecast method at Al-Ghazi Tractors Ltd. The advance booking period is normally six months. So, Head Office, Karachi, sends monthly production schedule to the factory according to the number of bookings. Al-Ghazi Tractors Ltd. has a strong dealers network from Karachi to Gilgit at the district level but the sale is done through ADBP. The bank prepared the draft and send to AGTL for booking. The plant is capable of providing 15,000 tractors per year. Whatever the demand is fulfilled by producing that required amount of tractors.

MATERIALS MANAGEMENT

“Materials management concerns short range decisions about supplies, inventories, production level, staffing patterns, schedules, and distribution”.

Decisions in these areas affect the whole of the organization, either directly or indirectly.

IMPORTANCE OF THE MATERIALS MANEGEMENT IN AGTL

Because Al-Ghazi is a engineering organization and assembling it depends upon the materials input to assembling. The other reason behind it is that is of short-range decisions so it requires more attention of the management.

The following are the reasons due to which the AGTL gives more importance to the materials management.

(1) Central Role of the Materials.

As the AGTL is a manufacturing organization so they need the input material for the purpose of the production of tractors from the vendors in country as need as well as the foreign countries. This material takes round about the 80% while staff takes 20% of the resources of the organization.

(2) Impact of inventory on profitability.

The other reason is the impact of inventory on the profitability of the organization. As on keeping more inventories the organization has to bear much more holding.

FUNCTIONS OF THE MATERIAL MANAGEMENT

The Sales, Vendor Development, Purchasing, Production Departments are tied collectively to perform the functions relating to the materials. The Sales Department makes the forecasts of the month, on the basis of orders paid by Agriculture Bank of Pakistan. Then these are send to the production department, then Production Manager makes the monthly production plan, then depending upon the production, they need the raw material which is asked by Sales Department to the Purchasing department, then this department makes the required purchasing plan. This plan is made for the purchase from the inside as well as from the foreign countries. The purchasing is made according to documented procedures of ISO 9002 standards discussed in ISO 9002.

RAW MATERIAL:

The company for the purpose of the production divided the items, which come under the input product and raw material, into two broad categories.

IMPORTED MATERIAL.

The main items, which are imported by this company, are relating to Engine and the critical items that are necessary for the purpose of the production by the company. The company imports these items from Italy, Turkey.

The raw material fall under this category for

c) Model 480-S is 15%

d) Model 640 is 24%

LOCAL MATERIAL:

AGTL is having 359 vendors from all over the Pakistan. These vendors are responsible for providing the high standards products to the AGTL. This contains the main portion of raw material. This is also categories according to the Models

c) Model 480-S 85%

d) Model 640 76%

Lead-time is the time required for receiving goods from the suppliers. AGTL has two types of suppliers.

1) Vendors from Lahore area have lead-time of 10 days.

2) Vendors from Karachi area have lead-time of 30 days.

Foreign suppliers

Lead-times for foreign vendors from Italy and Turkey have usually 6 months.

Quality Policy

The heart of Al-Ghazi Tractors Ltd. is quality, is the first company in the automobile industry of Pakistan to have achieved the highest Quality Award-The ISO 9002 registration which gives Al-Ghazi Tractors Ltd. the international recognition as producer of Fiat and New- Holland Tractors. Besides it Al-Ghazi was conferred the management excellence award by the Management Association of Pakistan for demonstrating the best Corporate Performance on quality in the Engineering Sector of Pakistan for the year 1995 and 1996.

In Al-Ghazi quality is a dynamic state associated with the products, services, people, processes and environment that meets or exceeds the expectations of their customers and it is a strong edge on the basis of quality against the competitors. There is well-established Quality Control department in the company that assures quality by incorporating other departments.

DEPARTMENTS

There is well-established setup to ensure quality in the company. The following departments are directly concerned with quality assurance in the company.

· Quality Control department.

· Purchasing department.

· Inspection department.

· Production department.

· Vendor development department.

There is a strong integration of all the departments to make assurance of quality at the every stage of whole the process starting from purchasing to final inspection of finished products.

Quality Control in purchasing

About 85% parts of 480 model and 75% of 640 model are obtained from local vendors while the remaining parts are imported from Italy. For local parts the Vendor department gives drawing and material specification to Vendors. Samples are obtained from them and are sent to well establish Material & metallurgical Laboratory, which is situated in the plant for calibration of, required specification of the part and strength of the material. If the results are up to mark then ordered are placed to them. Otherwise engineers of the company assist them in solving the problems relating to strength and specification of the part.

The purchased parts are inspected in the company and Karachi where company’s headquarter is situated, by taking sample among them on the following criteria.

13 out of 100 items.

32 out of 200 items.

The specification of the items, quality and the strength of material of materials used in parts are checked by material and metallurgical engineers in the laboratory. If the items are 2% of the total sample are defective than the whole lot is not accepted. Then all the items are checked and cost of checking and inspection of these items is beard by the vendors and all defective items are replaced and repaired by the vendors. If defective items are less than 2% than all defective are replaced and repaired by the vendors.

QUALITY CONTROL DURINDG WORK IN PROCESS

As the lot is accepted on the basis of sample and it may be possible that there are some defective items in the lot, due to this during the process on assembly line these defective parts are identified and than Quality Inspector or the employees working on assembly line separate them out and latter than these are returned to vendors.

The following are major activities/operations on the assembly line.

1) Gear box checking

2) Transmission

3) Coupling of Transmission with Gear box

4) Test Bench

5) Coupling of Engine with Transmission

6) First line

7) Paint shop

8) Second line

9) Final inspection

There is chained relationship among all above activities and operations. If one person fails to identify a defective item than the next one will identifies it. The Quality Inspector is on the assembly line to check the quality of the items and to identify defective parts.

FINAL INSPECTION

In the last a group of Quality Inspectors examines the finished product. They check the paint and performance of tractors on the “Roller test” to check the gear, speed and working of the tractors. After it each and every tractor is checked on the road before the delivery. For this purpose meter reading is noted before and after the test. Each and function is checked in the Road Test. After it pre delivery test is completed.

TOTAL QUALITY MANAGEMENT

“Total Quality Management is an approach to doing business that attempts to maximize the competitiveness of organization through the continual improvement of the quality of its products, services, people, processes and environment”.

In Al-Ghazi Tractors Ltd. management has been taking the following steps for Total Quality Management.

EDUCATION AND TRAINING

The management has established a training center in the premises of the company for training to the managers and workers to increase the performance at every level. This improvement in performance is directed towards satisfying such cross-functional goals as quality, schedule, and others activities. Before audit of ISO 9002 implementation in the company all the employees who are concerned with quality were given training so that all the employees could understand all the documented procedures, authorities and responsibilities of each other in the company. Some managers were sent to different seminars and workshops to learn about ISO 9002.

Now a days the companies has introduced their new product New Holland tractor in the market. For this they are giving training to new hired employees about assembling of the tractor.

TEAMWORK

In Al-Ghazi there is strong existence of teamwork. These are the managed group of the employees doing their best competitive efforts to cope with the barriers, rivalries and distrust among different departments to improve the quality of the their products. In the company the employees have

In Al-Ghazi all operation is directed satisfaction to both external or internal customers .The product produced, to the external customers is totally checked by the internal customers. The internal customers in Al-Ghazi check the quality of items, semi-finished goods during process because the work of one depends on the work that proceeds them.

OBSESSION WITH QUALITY

For obsession with quality the employees are trained from time to time to learn the philosophy “ how can we do better ” the suggestion given by the employees about quality are appreciated in the company.

SCIENTIFIC APPROACH

As the engine of the tractors are produced in Italy for Fiat and for New-Holland . From New-Holland Company which is a subsidiary of Fiat group. These both are operating 13 research and development center located in Brazil, Belgium, Canada, England, India, and Italy a united satiates. Besides it both is directly operating 19 manufacturing centers and 26 sales offices around the world? These research centers are using scientific approaches to develop and modify their existing and new products.

CONTINUAL IMPROVENENT OF SYSTEM

The management of Al-Ghazi tractors Ltd. has taken many steps to improve their system in order to continually improve the quality of products and services. Employees are trained from time to time and new technologies are adopted. Recently company has introduced hydraulic pressure engine in their 486 and 640 models.

A new product New-Holland has been introduced in the market that is symbol of new technology.

EMPLOYEE INVOLVEMENT

Employees are involved in all the matters relating to quality, purchasing and other functions of the company. It results in good decision making and more effective improvement by bringing more minds to bear the situation.

PRODUCTION PROCESS

The process design in the assembly line of tractors consists of the following operations an activities.

1. Gear Box

2. Transmission

3. Coupling of transmission with Gear-Box

4. Test Bench

5. Coupling engine with transmission

6. First line

7. Paint shop

8. Second line

9. Final inspection

GEAR-BOX

Engines and many parts of the tractors are imported from Fiat manufacturers in Italy and Turkey. During the journey from Italy to the plant many parts of gearbox get loose. On arriving in the plant, during assembling certain operations are performed by technical individuals, are discussed as under.

1- CLEANING OF CASE FROM INSIDE

Here the case of gearbox is cleaned from inside because it is much effected due to dust. The dust is removed from inside the case by cleaning it with some dust-removing agents.

2- COUNTER SHAFT NUT TIGHTING AND STAKING.

Some parts of gearbox get loosed because of journey in ship and later on trucks. Here shaft is tightened and some other items are assembled to it.

3- TRANSMISSION SHAFT COVERS TIGHTENING.

After counter shaft nut tightening next the transmission shaft cover is tightened because of above reasons.

4- SPILTER TIGHTENING AND LOCK PLATE BENING.

After transmission shaft cover tightening a splitter of weight of 9.5 kg is fixed into the gearbox by tightening bolts and locking plates are bent.

5- CHECK POSITION OF MAIN SHAFT INNER AND SEAL AFTER INSERTION OF P.T.O. SHAFT.

It is a final operation in the gearbox checking. Here it is checked and assures that our shafts are on its right place or not, further corrective actions are taken to make it ready. Then gearbox is totally sealed after insertion of P.T.O. shafts.

TRANSMISSION

The following are the operations that are performed during transmission.

6- CLEANING FROM INSIDE.

Here nozzles that are to be fitted into gearbox are cleaned. Others parts are also cleaned and oiled.

7- BEVEL PINION NUT TIGHTENING.

It is the second operation in transmission. Here the bevel pinion nut is tightened into the gear- box.

8- BEVEL PINION ROTATING TORQUE.

Bevel pinion rotating torque is cleaned and made ready for assembling into the gearbox.

9- DRIVE HEAD TIGHTENING.

Drive is a separate part, which is later adjusted to the gearbox, is tightened with some of other parts.

10- BEVEL DRIVE ROTATING.

Bevel drive rotating is cleaned and its specification is checked and is sealed by adjusting it into the gearbox.

11- BEVEL DRIVE BACKLASH.

Here the bevel drive is recoiled so that it is ready for coupling to gearbox and engine.

COUPLING OF TRANSMISSION WITH GEAR-BOX

Here gearbox and all other parts, which are prepared in transmission, are coupled and the following operations are performed.

12- GEARBOX WITH TRANSMISSION TIGHTENING.

Here gearbox is coupled with transmission by tightening that integrates them.

13-FINAL DRIVES TIGHTENING.

Drive head, which is a separate part, is tightened into coupled gearbox and transmission.

14- BREAK PEDAL ADJUSTMENT .

Here the position of break pedal is adjusted for both forward and back Tires with the engines.

TEST BENCH

Here the engine is checked to check that are its parts are at their its correct places or not, further actions are taken later on.

15-OPERATION TEST.

Here the engine is checked by engintioning it and the performance of the engines are checked to ensure its performance.

16- CLUTCH TO FLY WHEEL TIGHTENING

Here the flywheel are checked and tightened strongly with the transmission.

17- ENGINE WITH TRANSMISSION

Here the engine is combined with the transmission and bolts are strongly tightened.

18- MASTER CLUTCH PEDAL ADJUSTMENT

Here the master clutch pedal is adjusted.

19- P.T.O HAND LEVEL ADJUSTMENT

20- HYDRALIC LIFT TRANSMISSION TIGHTENING

Here hydraulic lift is fixed and tightening with transmission.

21- LEVER TO STEERING BOX TIGHTENING

Here lever of tractor is tightening with the lever to transmission.

22- FRONT AXLE SUPPORT TIGHTENING

The bolts of front axle are tightened to the transmission.

23- DRAG LINK TO STEERING ARM AND AXLE TIGHTENING

Here small and big axles are tightened to transmission.

24- CORRECT APPLICATION OF PROTECTION TO VARIOUS PARTS

Here different parts are checked and adjusted to their correct places.

25- WASHING

Here to remove dust the body of engine , the body of the engine is washed with hot mixture of hot water and chemicals.

26- PRIMER

Here the body is make prepared for paint by allowing to remained in the hot air.

27- PAINT

Here the steel body is painted in the “Paint Shop”.

SECOND LINE

28- INJECT GREASE IN ALL LUBRICANTS

Here grease and other lubricant oils are injected to engine and moving parts of the tractors like wheel.

29-ELECTRICAL SYSTEM

Here all electrical wiring system is built ion to the tractor a d a battery is adjusted in the tractor. All lighting bulbs are put bonnets relevant places.

30- ALIGNMENT OF STEEL METAL

Here the painted body of the tractor is aligned tom the engine and other body of the tractors.

31- FRONT WHEEL TIGHTENING

Here the bolts of front line are tightened and also are injected grease to it

32- REAR WHEAL TIGHTENING

Here the bolts of the back wheel are tightened, and the inner parts are oiled with Mobil Oil.

33- WHEEL ALIGNMENT

Here the front and back wheels are alighted and their bolts are tightened.

34- OIL CHECKING

Here the oil levels are checked and fill oil to it and after it the final inspection is made.

FINAL INSPECTION

The following are the operations, which are performed during final inspection of finished tractors.

1) Engine oil level checking

2) Gear Box oil level checking

3) Air cleaner oil checking

4) Water level checking

5) Weight test of Hydraulic pressure

CHECKING OF OPERATING PARTS:

6) Clutch play tightening and sound test

7) Tightening of break L/H & R/H

8) P.T.O Clutch test

9) High, low gear sound checking

10) 1-2-3-4 & reverse gear checking

11) break seal of L/H & R/H

12) Final drive tube leak

13) Differential case hole and sound checking

14) Gear box top cover leak checking

15) P.T.O top cover leak checking

16) P.T.O plate leak checking

17) P.T.O cover leak checking

18) P.T.O seal leak checking

19) Differential leak checking

20) Engine sound checking

21) Lift pump support checking

22) Automisophry support checking

23) Paint cover checking

24) Fuel engine pipe leak cover checking

25) Top hydraulic leak checking

26) High pressure pipe leak checking

27) Low pressure pipe checking

28) Steering plate leak checking

29) Steering loose/tight/free checking

30) Wheel alignment checking

31) Tie rood (rubber boot/pin) checking

32) 640 fender & distance checking

33) Sheet metal (paint/welding/crack) checking

34) Grease checking

35) Tire’s air checking

36) Self starter checking

37) Leaving box checking

ELECTRICAL LIGHTING SYSTEM CHECKING :

38) Parking lights checking

39) Parking indicators checking

40) Neutral switch checking

41) Head light low checking

42) Head light high checking

43) Beam indicators checking

44) Oil pressure checking

45) Alternate light checking

46) Alternate junctions checking

47) Fan belt (extension/loose) checking

48) Fuel gauge checking

49) Temperature gauge checking

50) Main wire clip checking

51) Back lights checking

52) Horn checking

53) Yellow lamp checking

54) Fuse box checking

55) Wire fitting checking

56) All body paint checking

57) Sheet metal checking

ISO 9000

ISO 9000 is quality system standards are highest criteria of quality in the world. Many companies in EC, Arab countries, USA and other countries are now demanding ISO 9000 registration from the suppliers around the world. Approximately 45000 companies around the world are ISO 9000 certified. ISO 9000 is effecting industry and business in every sector. Due to the importance of the ISO 9000 many companies in Pakistan have start their journey on the certification.

ISO 9000 IN AGTL

AGTL is the first company in the automobile industry of Pakistan who has achieved ISO 9000 quality award. The ISO 9000 registration which gives AL-Ghazi Tractor Limited the international recognition as producer of FIAT and New Holland Tractors.

REASONS FOR OBTAINING ISO 9000

q To maintain the world class standard of Fiat.

q To produce quality confirmed tractors.

q To determine all steps in the production so that it can identified and corrected.

q To have quality control over the purchases from the vendors to all over the Pakistan.

q To have an effective internal audit to identify mistakes and takes corrective actions.

q To be automobile leaders in Pakistan.

q To expand the market to the other nearest Asian countries.

ISO 9002 IMPLEMENTATION IN AGTL

Al-Ghazi Tractors is the first Company in the Automobile sector of Pakistan to have achieved the highest quality award “The ISO 9002” registration which gives Al-Ghazi Tractors Ltd. the international recognition as Producers of Fiat and New Holland Tractors.

The customers of every organization in response to new global competitive environment have become more quality conscious. Now due to it some of your customers might already asked you about the ISO 9000 series quality standard and your attention in this regard. Now a-days, no matter what business you are in, you will be eventually be asked, “Are you ISO certified” by your customers. Now a days in the World, just about every business, from the large multinationals to the local organizations have pursued or pursuing certification to satisfy and win the hearts of their customers.

In Pakistan about 90 companies have still certified ISO 9000 that is a positive indicator as it laying a foundation of Quality Management in the companies. Its nice to see so many companies achieving ISO 9000 registration the growth is extraordinary. Al-Ghazi Tractors Ltd. the market leader in tractors in auto industry is the pioneer in getting the highest quality standard of World ISO 9000 in Pakistan. The management and employees have taken it a real challenge to integrate the Quality Management into their business operations as an essential part of their work.

MANAGEMENT RESPONSIBILITY

OUR QUALITY POLICY:

“OUR MOST ENDURING COMPETITIVE EDGE IS QUALITY OF OUR TRACTORS”

RESPONSIBILITY AND AUTHORITY:

The quality control program with in Al-Ghazi Tractors Ltd. has been established at the direction of the Senior Management due to demand of quality as a competitive edge in Auto Industry. The responsibility for development and integration of the quality plan resides within the quality control operation. The responsibility for execution of the quality program is delegated to the Production Manager. The Production Manager has delegated responsibilities to all those who are concerned with quality. Responsibilities and authorities in the company have been documented.

Quality control has the organizational freedom and authority to initiate action to prevent the occurrence of non-conformities, record problems, initiate corrective actions, verify solutions, and if necessary, stop those processes until such time as they fully comply.

Quality Control Manger oversees the quality control operations for the company. The Quality Control Manager has the responsibility for overseeing, incoming material inspection, work in-process test, final inspection, and statistical techniques in conjunction with the production departments.

Independent personnel are trained and appointed by the quality control department, perform the quality audits and can audit any area from which they are trained and appointed.

The management of Al-Ghazi has designated appropriately trained individuals, to meet all the requirements of the quality program. Quality control department has approved personnel performing the quality inspections. The employees who are concerned with quality in the company have been trained to understand and maintained the quality policy of the company.

Ø There are documented job descriptions that define authority and responsibility for quality operations.

Ø There are trained employees have been assigned to internal audit activities and audit reports are transmitted to senior management.

Ø The trained engineers and employees of Materials and Metallurgical laboratory to verify and inspect the conformance of incoming raw materials and products against the design specifications that is managed overseen by quality control department.

Ø The trained engineers and employees of Quality Control department and Production Department perform In-process inspection, final inspection, and functional testing that ensure conformance to product design specification.

The Production and Quality Control Mangers are responsible for insuring that the ISO 9002 requirements are met as well as all other customer requested requirement. It is also the function of the quality control manager to provide regular feedback on the status of the quality system and its progress. This is accomplished via reports on those measures reflective of the quality system.

The Quality Control Manger also acts the primary communications point with reference to any outside bodies affecting the quality system.

From time to time the Quality Control Manager reviews the quality system’s methodology and its application to the ISO 9002 Standard. Revisions to the manual and quality system is made as required to guarantee the quality of the product, services, and the needs of the company.

The Upper Management and staff conduct regular reviews of quality issues. These documented reviews are used for further corrective plans.

In Al-Ghazi Tractors Ltd. the quality control program is a formally documented system of planned activities established to provide evidence of compliance to the requirements of applicable regulation, codes, standards, contractual specifications, drawing, ISO 9002, as well as the company quality policy.

All of these activities are governed by procedures and written instructions supported with records of training and satisfaction compliance of products and processes. The Production Managers establishes measures to implement these requirements as defined in this manual. This include the preparation of procedures, are documentation that are used to assure compliance to the quality control program.

The quality manuals and all the supporting departmental procedures are referred to as the quality plans. The preparations of these plans are responsibility of the Production Department and Personnel Department and maintain them in conjunction with senior management review.

The management of Al-Ghazi Tractors Ltd. has established and maintained procedures for the acceptance and review of customer orders. This is the responsibility of the sales and marketing departments to ensure documented procedures and records are in place to adequately meet the requirements, maintain a documented system with appropriately maintained records to ensure the appropriate review of the customer’s orders. This ensures that the order is well understood by both parties as that we have the capability to meet the requirement. These procedures require agreement prior to the acceptance to the order. It is the responsibility of the sales organization to ensure a comprehensive documented integration of this requirement exists.

AMENDMENTS TO CONTRACTS

Each organization affected shall maintain procedures for the processes used to amend a customer requirement to ensure compliance with the request.

RECORDS

The customer orders (contracts) shall be maintained by the sales organization for the duration of the warranty period plus one-year unless otherwise requested by the customer. Documented procedures shall exist to support the retention of these records.

DOCUMENT AND DATA CONTROL

At Al-Ghazi Tractors Ltd. the management has established document and data control procedures for the collection, maintenance, and distribution, one of key requirements of ISO 9002 implementation. It is the responsibility of each department to follow the established procedures for the collection, maintenance, and distribution and control of all the documents, instruction, and data in their operations to meet the intent of the ISO 9000 standard.

In Al-Ghazi the following documents are maintained and controlled.

Ø Policy Documents

Ø Quality Manuals

Ø Operations Procedures

Ø Quality Procedures

Ø Drawing

Ø Specifications of materials

Ø Inspections & Test Criteria

Ø Process Technology

Ø Quality Plans

Ø Work Instructions

Ø Storage

Ø Handling & Maintenance Instructions

Ø Quality Audit

Ø Training Document

etc.

All departments in Al-Ghazi have established the procedures and maintenance of the documents. Documents and Instructions are established to handle and avoid whenever a lack that could adversely affect the quality of the process, product, or services provided by the operation. Every department is responsible to ensure that the documents are approved by the supervision of the authorized technical individual or concerned manager who is appointed there. In the case of conducting tests for quality assurance, the manager of quality control department is required to approve the document.

A master revision listing of the documents of the vendors is maintained and issued by the quality control department at the end of each month to Vendor Development Department for further purchasing decisions. It is the responsibility of the all departments to ensure that only current documents are available for usage. Obsolete documents must be promptly removed by the department and adequately identified as available for reference only.

DOCUMENT CHANGE

Prior to the issuance of any new procedure/instructions/documents approval is required from the Upper Management. To upgrade a document related to quality, the quality control department required to provide a new revision about it is possible and feasible or not. When making changes, it is required that the changes from the previous instructions be highlighted to ensure the proper changes are readily implemented. All of the department are informed and provided with attested copies by the concerned manager and upper management, with modified or upgraded documents for information and implementation.

PURCHASING

Providing the best quality products require best and raw material that meet certain required specifications. It is the most important function in ISO 9000 standards implementation requirement. The purchasing department plays an important role in it that makes documented policies about the purchasing. In Al-Ghazi Tractor Ltd. the purchasing department situated in head office has established and maintained a documented process with appropriate records that ensure the purchased products meet defined specifications.

The purchasing department has established documented procedures with the co-operation of quality department by which supplier are selected. Their selection incorporates at least three considerations in the following priority:

Ø Their ability to deliver material that meets the product specifications.

Ø The evaluation of the quality of the products by quality department to ensure that consistent and desired quality is met and delivery requirements.

Ø A cost competitive delivery of the material.

The purchasing department in conjunction with the quality control department determines the methodology employed to ensure the receipts of the appropriately conforming materials. The purchasing department in conjunction with the inspection of incoming materials maintains records of the supplier’s performance. The purchasing department only purchases materials from approved suppliers/vendors. It is the responsibility of the purchasing department to establish and maintain procedures for the generation of an acceptable supplier listing. The listings of approved suppliers must have the approval of the quality control department.

The purchase orders provided to the suppliers contain appropriate information about standards, specifications, and drawing testing criteria of the company packaging, delivery schedule, mode of transportation.

The purchasing department has defined the documented procedure how they will ensure that all materials introduced into the operations have undergone a review for conformity. The purchasing department looks and checks the materials by commodity grouping according to defined inspection routines for each commodity.

As the tractors are manufactured against the bookings so there is proper documentation of customer supplied products. AGTL is responsible for maintaining the products in good condition before the delivery.

In Al-Ghazi Tractors Ltd. it is the responsibility of each department to develop and maintain process that ensures their continued conformance to customer requirement and the ISO 9002 standards. This includes operating instructions for all department and employees that affect quality. Specific work instructions and procedures have been defined and documented where there is a lack that adversely affect quality, it includes.

Ø Documented work instructions / procedures that define the manner of production, installation and servicing.

Ø Use of suitable production and installation equipment.

Ø Suitable working environment.

Ø Compliance with referenced standards / codes and quality plans.

Ø Monitoring and control of suitable process and product characteristics during production.

Ø Approval of process and equipment as appropriate.

Ø There is suitable maintenance of equipment to assure continued capability.

Specific training and instructions are given to employees to understand and retain specific records for these special processes.

For employees it is recommended that they follow the assembly line instructions flow-charting method.

Al-Ghazi Tractors Ltd. has established and maintained documented procedures for inspection and testing activities associated with verification of specific requirements of the materials / products. There is a well-established computerized Material and metallurgical laboratory in the plant where operations are performed to check the strength and the appropriate specifications of items.

All procedures and activities affecting testing are overseen by quality control and their signature on the proposed procedure is required to the Hovel Card which is attached with gear box and it remain with it until the competition of the product.

At Al-Ghazi it is responsibility of inspection department to ensure that no material can be used until they can verify compliance with the specified material requirements. The inspection is carried out in Material and metallurgical laboratory by taking a sample from the lot and according to the documented inspection procedure. Quality control engineers approve the testing procedures.

The production department is responsible for work in process inspection and testing. At Al-Ghazi Tractors Ltd. the production department has generated a comprehensive inspection and test plan that ensures that all defined testing requirements are met. This testing plan is based on documented testing instructions. No materials may bypass these inspection plans or continued to be processed without successful completion of the test and inspection requirements. For this purpose many quality inspectors have been assigned on the assembly line. On assembly line the output of one is the input of other one, due to this there are less chances of bypassing a defective item.

The production department has generated a comprehensive inspection and test plan that ensures that all defined testing requirements are met. In the last a complete testing plan is formulated to ensure the quality and conformance of the final product. No product may by pass until the final inspection.

Inspection and Testing Records.

A Hovel Card moves on assembly line from beginning to the end. Each observation and testing made by any person is checked and he signed on the card. If any person commits any mistake he is the responsible for it

Control Of Inspecting, Measuring and Test

Equipment

Being a engineering work in the factory, all of work is performed through machines and equipment’s. Quality and Inspection departments in Al-Ghazi Tractors Ltd. have established and maintained documented procedures to select, control, calibrate and maintain inspection, measuring, and test equipment used to demonstrate conformance of the product or items. These devices include measurement tools, gauges, verification software, or any other “device” used to ensure conference. There is a well establish Material and metallurgical laboratory in the factory equipped with inspection, measuring instruments and is computer assisted.

The devices, mechanic is assigned to the appropriate individuals who know who to make it run. For this the employees are properly given training so they are able to handle the instruments for security purposes. History of the equipment is maintained and whenever it become out of order, it is repaired properly to avoid further errors.

The production department in conjunction with inspection department and engineers determine the measurement to be made, the accuracy required and the appropriate device that is capable of the necessary precision.

All the devices are used on a schedule based on usage or duration of time. The schedule has been scheduled in such a way that the all the operations in factory are not affected. Documented inspection procedures exit for the calibration of equipment. That includes maintenance, duration between recalls, as well as the actual testing for which the device is being used. No unauthorized person can make changes in the devices.

Inspection and Test Status:

Production department has established documented process with procedure for ensuring that all materials / products carry a test status. The incoming materials or items are checked by Inspection department, after successful checking they paste a material transfer tag designating transfer for acceptable materials, if the material is not up to the mark than a further tag is pasted on the lot for further decisions.

The work in-process inspection stations demonstrate compliance on HAVEL CARD on which each person who perform a particular activity sign about the conformance and specification of or item used. On assembly line there are many inspection stations where quality control inspectors are assigned that checks the progress and quality of process as well as material used.

Final inspection is done by a group of quality inspectors and it validates the existence of all prior inspection against the check sheet as well as the test data and sign of on acceptance. This check sheet acts as the quality records.

Control of Nonconforming Product:

Quality is the heart the factory. Quality, Inspection and purchasing departments initiate and maintain procedures with the appropriate records to ensure that non-complying materials are prevented from inadvertent use. These procedures concerning with nonconforming materials ensure the proper identification, documentation, evaluation, disposition of products.

Nonconforming Product Review and Disposition

When a material is found to be defective/nonconforming then according to established procedures are placed for appropriate disposition. Quality department initiates the authority for disposition of products. By taking a sample from the lot the inspection department checks the specification of the product. If it is up to mark than it is accepted. If not than further actions are taken thorough investigation of the defects, the result of which can fall into the following categories.

Ø Reject the lot.

Ø Check whole the lot on the expenses of suppliers.

Ø If less than 20 % lot is defective accept non-defective parts.

Ø If more than 20 % than reject the whole.

All decisions by the Inspection department results from an investigation of the material specifications. Any compromise to the material will require notification of the affected parities.

Corrective and Preventive Action:

All departments in Al-Ghazi Tractors Ltd. have established and maintained procedures for implementation of corrective and preventive actions. It is the slogan of the company that:

“We always take corrective actions not just corrections”

These non-conformities are collected, analyzed, and than with root-cause philosophy they are corrected. Safety issues have received top priority and immediate allocation of resources. In all cases where a corrective or preventative action is employed, a record of the changes made shall be recorded and the record is maintained for further actions.

A corrective action results from a customer, employee of factory or a report of a product nonconformance. The sales department maintains a documented process by which the complaints are complies, analyzed, and corrective action will address not only the root cause source of the nonconformity. A report is generated to Senior Management about complaints made by the customers for the solution. Corrective actions are than taken by the management after reviewing the situations.

Preventive Actions:

A preventive action is taken on the information indicating a nonconformity within the operating process that affects quality. These information are gathered by way of internal audits, quality records, yields shortfalls, service reports, customer complaints, employee’s indication or any other areas indicating process failures. The quality department than takes action for the prevention of such failure/shortfalls in the future. The quality control department maintains documented processes by which the shortfalls are complied, analyzed and preventive action initiated and tracked. This prevention action is addressed not only the root causes but also the application of controls to ensure its effectiveness. Senior management reviews a report of the corrective and preventive actions.

Handling, Storage, Packaging, Preservation and Delivery

There is separate department for handling and storage of all the input materials has established and maintained documents procedures for the handling, storage and preservation all input products.

There are appropriate trained employees to ensure the proper and safe handling of materials. All forklift drivers are trained to operate the lift.

When an item or product come in the premises the employees put them to large case which contains their identification number and name of that commodity. There are appropriate trained employees in the handling and storage department that ensure the proper and safe handling of materials. All materials are stored to prevent deterioration as well as support easy retrieval for usage. It is the company’s policy to follow a “first in first out” inventory policy and all material storage procedure is accommodate to this policy.

Those materials that are sensitive to environment like it is very important to make safe the engine from dust (as all around the plant there is much dust) the engine is kept remained within the case in store and it is not place openly. All the material is properly handle, continually monitor, and removed if appropriate. All other materials are monitored at regular intervals to detect deterioration.

Receipts for storage and dispatch of materials from storage and handling department are issued and received by authorize persons.

The trained employees of materials handling and storage department package supporting materials which is given with the tractors. They also maintain packaging of the materials, which are to be use in the internal operations.

A big secure store area has been established in the plant in material and handling department to segregate the input and semi-finished products to ensure its preservation.

There is network of dealers of Fiat and New-Holland tractors from Karachi to Gilgit in Pakistan. About 98 % of tractors are sold through Agriculture development Bank of Pakistan and only 2 % sales are on net cash. The tractors are delivered to customers through the dealers or they nay buy from company premises.

All departments that are related with quality have established and maintained documented procedures on how they handle quality records. These procedures identity the records of all the departments for decision making about quality. Authorization has been served to individuals of quality department for issuing, receiving documents related to quality. The procedures have been establish that through light and guide about

Ø Methods for collection of quality records

Ø Indexing of quality records

Ø Methods for accessing of quality records

Ø Filing the quality records

Ø Storage of quality records

Ø Maintenance of quality records

Ø Disposition of quality records.

The purpose of the records is to demonstrate conformance to the specified requirements of the quality system.

The quality control department have established and maintained documented procedure for the planning and implementation of internal quality audits of operation and the results generated.

The quality control department has assigned duties of internal audits. Then results are use further decisions and for comparison of actual practices to the documented procedure and instructions maintained by the department. The audit is about all areas affecting quality to assess the degree of compliance and effectiveness of the quality system. These audits are conducted according to an audit plan based on the importance of the operation being audited.

Training

There is a well-established training institutes in the company. Where all employees who affect quality are given training from time to time. Training is given to the managers and workers to increase the performance at every level. This improvement in performance is directed towards satisfying such cross-functional goals as quality, schedule, and others activities. Before final audit of ISO 9002 implementation in the company all the employees who are concerned with quality were given training so that all the employees could understand all the documented procedures, authorities and responsibilities of each other in the company. Some managers were sent to different seminars and workshops to learn about ISO 9002.

Now a days the companies has introduced their new product New Holland tractor in the market. For this they are giving training to new hired employees about assembling of the tractor.

The Human Resource department has established their documented procedures.

Servicing

Al-Ghazi Tractors Ltd. has offered after sales service to its customers on both Fiat and New-Holland models. The sales department has established and maintained documented procedures and records as related to the services provided. When a customer has some problem in machinery he contacts the nearby dealer of the company which prepare a claim and send it to head-office for further actions.

Statistical Techniques

Each department in Al-Ghazi Tractors Ltd. has established and maintained documented procedures to implement and control the applications of statistical techniques in their operations. These procedures have been established in conjunction with the quality control department.

To confirm the processes and product performances and in an attempt to increase it, following statistical techniques are being used

Ø Sampling

Ø Formulas for evaluating sampling

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