NFL Report Final

1

Supply Chain Management

Report Submitted to: Sir Ibtihaj Khan

Group Members

Faizan Salim Khemani

Shamsher Shiraz

Ammara Usman

Hassan Ali

Nawaid Ahmed Siddiqui

1

Contents

Introduction to the National Foods ........................................................................................................ 1

Vision Statement .................................................................................................................................... 1

Mission and objectives ........................................................................................................................... 1

Production .............................................................................................................................................. 3

SITE Area Karachi ............................................................................................................................. 3

Port Qasim .......................................................................................................................................... 4

Muridke .............................................................................................................................................. 4

Competitive Strategy ............................................................................................................................. 5

Planning Strategy and Goals .................................................................................................................. 6

Organizational Organogram ................................................................................................................... 7

Business Model ...................................................................................................................................... 8

PEST Analysis ....................................................................................................................................... 9

Political/Economic Conditions........................................................................................................... 9

Social Activities Conditions ............................................................................................................... 9

Technological Analysis ...................................................................................................................... 9

Competitor’s Analysis ........................................................................................................................ 9

PORTER’S 5 FORCES OF NFL ......................................................................................................... 10

Rivalry among competing firms ....................................................................................................... 10

Potential entry of new competitors .................................................................................................. 10

Potential Development of substitute products .................................................................................. 10

Bargaining Power of Suppliers ........................................................................................................ 10

Bargaining Power of Consumers: .................................................................................................... 10

Supply Chain Process .......................................................................................................................... 11

National Foods Limited Products: ....................................................................................................... 12

PRODUCT LINE ............................................................................................................................. 12

SUB Categories .................................................................................................................................... 14

DESSERTS ...................................................................................................................................... 14

Recipe masala................................................................................................................................... 14

RECIPE ............................................................................................................................................ 14

RECIPE MASALA JARS ................................................................................................................ 15

RICE ................................................................................................................................................. 15

fruitly ................................................................................................................................................ 15

JAMS ............................................................................................................................................... 15

FRUITILY ....................................................................................................................................... 16

CHINESE ......................................................................................................................................... 16

SNACKS .......................................................................................................................................... 16

BASIC RECIPE ............................................................................................................................... 17

SALT ................................................................................................................................................ 17

CHUTNEY & SAUCES .................................................................................................................. 17

GINGER AND GARLIC PASTES .................................................................................................. 18

GOLDEN FRIED ONIONS ............................................................................................................. 18

MASALA SNAX ............................................................................................................................. 18

PICKLES ......................................................................................................................................... 19

Logistical System or Tools .................................................................................................................. 19

Supplier Selection Criteria Procurement Process ............................................................................ 20

Supply Chain Model ............................................................................................................................ 21

Discussion on the phases of supply chain ............................................................................................ 22

Demand & Planning Department ..................................................................................................... 22

Production Planning ......................................................................................................................... 22

Procurement ..................................................................................................................................... 22

Manufacturing & Warehouse Management System ........................................................................ 22

References ............................................................................................................................................ 23

1

Introduction to the National Foods

National foods established in 1970 as a spice industry, with the concept of providing healthy and

clean food products. NFL initiates easy to cook concept to make life easy for the household

women so that they could have more pleasing life style. NFL came in long before the concept of

corporate mission evolves in the market. NFL tries to cope with the challenges of bringing in the

diverse and innovative products but simultaneously retain the traditional values as well.

In the history of 4 decades since NFL establishment, its success remain uphold under the most

influenced events such as economic crises, global terrorism activities and rapidly changing

technological advancement and its vision still state the development of product for changing

consumer life-style.

Vision Statement

NFL wants to be a company worth Rupees 50 Billion by the end of year 2020 in the expediency

food industry by expanding its product line and penetrate more into the local and global markets.

It focuses on creating a high value for their customers by means of management core

competence and effort.

Mission and objectives

Supporting its vision of becoming 50 Billion rupees company by 2020 they already set their long

term goals and focusing more on its top brands for the global expansion. NFL annual report for

the year 2014 indicates that NFL grow by 15% and in last five year its turn-over is doubled

shows a favourable operational environments despite of having economic recession.

`2

NFL is also devoted for their customer attractiveness in a view of uplifting its share-holder value,

their priority is to strengthen their star brands by keeping the cost low, making the operation

simple and become more responsiveness in terms of consumer demand without compromising in

the its quality.

NFL inbounds a relation with its consumers by having a cultural inheritance having a huge

portfolio including the typical brands that keep them connected.

NFL persuaded that the by means of excellent quality and amazing infrastructure, the vision of

2020 will definitely be achieved. They also built their talent pipeline and initiate for becoming

agile and flexible organization comparatively.

NFL attempted to gain more consumers in the local and international markets with the help of

tremendous operational performance through their supply chain activities and keep delivering its

best until NFL become customers’ number 1 choice.

The dedicated workforce plays a vital role in NFL success and they believe of investing more on

human resources by providing them an ideal working atmosphere which helps them unleash its

maximum potential in terms of NFL growth and productivity.

They focus on delivering successful sales strategies with quality standards and innovations

evident its sales expansion from Rupees 20 million in the year 1993 to Rupees 14 billion in the

year 2014. Its capitalization also increases from million 20.57 in the year 1993 to billion 40 in

the year 2014.

NFL is also a supporter of CSR activities as an Adult Literacy Program as launched for its

employees in early 2000 and soon spread across all business function in its board till now.

`3

NFL believe that global penetration will not only beneficial for the company but also contribute

in the economy of the country as a whole. They plan to deploy profitable reserves upon the new

upcoming projects to secure future growth and market share.

Production

The National foods has its operational capacity to meet its future expansion plans and to meet the

demand. NFL has three operational divisions located at:

SITE Area, Karachi

Port Qasim, Karachi

Muridke Punjab

Gujranwalla, Punjab

The finished goods are stored only at Port Qasim Warehouse in Karachi from where it further

disseminated to the distributors.

SITE Area Karachi

The Paste Plant team was effective in implementing numerous projects for process

improvements and production enhancement, ensuring its contribution towards strategic business

progress. The process of the 3.25 kg and 100 gm sachet machine was transformed from a purely

manual work to the semi-automation leading in increased productivity and efficiency of the

machines.

The stimulation of high speed shearing mixing pump, high pressure washing device and two

sided carton taping machine has helped in the reformation of the processes, making it more

efficient with improved quality of production.

`4

Furthermore, the productivity of the Salt Plant has significantly increased by 29%, leading to

wastage reduction upto 6%. These efforts were also supported by organizing informative

awareness sessions for the factory staff. In order to improve our working environment and

making it more conducive for the production an in-house dust collection system has also been

installed. Recently, on a trial and error basis, NFL acquired an external warehouse to meet its

demand for material warehousing. This warehouse has been transformed into a world class

storage unit, receiving 99% score in Goods Manufacturing Processes audit.

Port Qasim

During 2013-2014, the Port Qasim team successfully implemented various process enhancement

projects which lead business to grow. These projects ranged from efficient processing and

cutting of Mangoes, recycling of brine wax and sugar bags to eliminate unnecessary raw

materials and significant cost savings in our system

Muridke

Muridke plant has successfully amplified the capacity of its Salt Plant by installing a new

grinding and sieving line. After installing the plant, now NFL ensures its production to be

completed in two shifts, with the plant capacity enhanced to 90 MT per day from 57.6 MT which

was carried out in three different shifts. This project will help in restricting additional freight cost

and save approximately 9 million rupees annually.

Moreover, the Muridke team has successfully carried out 70% of the fabrication, civil and

electrical tasks in-house, leading to substantial savings during the execution of the project.

`5

In line with the Plant’s OHSAS certification, we are also planning to obtain Food Safety

Management System ISO 22000, 2005, certification. In order to pursue this objective, we have

additionally invested rupees 2.5 million to strengthen the infrastructure of the plant.

Lastly, the payroll system and attendance of the workforce including the third party workers is

now logged through swipe card, which ultimately linked with the HR payroll system, resulting

both the payroll and attendance recording processes more effective and transparent.

Competitive Strategy

As we know that Shan and Mehran are the two main competitors of NFL. Shan and Mehran has

an edge over the export, whereas, on the other hand NFL has a strong distribution channel of

approx. 245 distributors throughout the Pakistan, except Karachi which proves to be their

competitive advantage over the rest. Furthermore, NFL has segmented Planning and Sales team

region wise and area wise locally.

Secondly, NFL plan to sustain its local market share by further strengthen their distribution

channel and simultaneously penetrate in the global market in order to be a leader in the export

comparatively.

Lastly, NFL wrap up their forecast of all respective production units for the forthcoming month

before the 20th

of the ongoing month.

`6

Planning Strategy and Goals

In this modern era where the life is fast paced, carrying out business decisions has a significant

impact of technology, as we also know that to cope with the latest technology in this fast

growing world is necessary for the existence. Forecasting, and tactical approaches are now relied

upon sources of available information. Exact usage of the facts can influence and remunerate the

outcomes of business leads towards the business growth, improved market share and profit, and

most importantly to portray the image of brand in line with their desired perception accepted

around the globe.

NFL’s desire to be a market leader in the local and international food industry cannot be

achieved without the proper use of technology. In-fact, the rapid and sustainable business growth

can only be accomplished through the constant usage and the enhancement of adaptive

technology according to the modem organizational practices.

`7

Organizational Organogram

`8

Business Model

`9

PEST Analysis

Political/Economic Conditions

Commercial fluctuations, extremist activities and governmental turbulence may cause business

disruption, inflation, deflation or reduced demand for NFL food products. Success will rest on

the organization's capability in managing continual worldwide political and/or economic

insecurity, prominently in substantial terrestrial markets, as well as any governmental or

economical disturbance due to extremist and other unreceptive happenings

Social Activities Conditions

The instabilities or changes in social /cultural happenings in the zones of operations may also

affect the National Foods business activities.

Technological Analysis

The modernization and evolving of innovative products is the evidence that NFL possesses

modern advancement and dedicated workforce that has empowered them earns higher reputation

in the international market.

Competitor’s Analysis

NFL has also kept their eyes on their competitors to analyze the happenings in the industry. NFL

concentrates strictly on the capital investments, enhanced inventory measures, and to be efficient

in reducing overall cost by means of identical manufacturing platforms etc. Their major

competitors are Mehran and Shan industries.

`10

PORTER’S 5 FORCES OF NFL

Rivalry among competing firms

NFL is facing competition against renowned organizations i.e. Shan and Mehran industries. To

gain the competitive edge over the aforementioned organizations, NFL not only needs to

improve their products but also supplemented various add-ons through technological

advancement such as implementation of SAP for the purpose of production planning and

manufacturing.

Potential entry of new competitors

In this age of technical advancement, several new companies are penetrating into the food

production industry furnished with excessive features, which may also compel many existing

firms to sustain its market status. NFL is also having rivalry from Mitchell’s in sauces.

Potential Development of substitute products

Fortunately for NFL, there are not many substitutes of their products available in the market. For

example there is no reputable substitute for pickles, spices or sauces.

Bargaining Power of Suppliers

NFL has an agreement with its providers in almost all domain of its process, NFL provide

evidence to its existing suppliers for building better understanding and relationship with them.

The tactical collaboration with its providers has positioned NFL in reducing total cost and also

enriches the class of materials being delivered.

Bargaining Power of Consumers:

NFL concentrates towards its services in achieving its customer loyalty. NFL also offers worth

products in economical market prices to its customers, which in return proved NFL to be

successful for such a long duration since its inception.

`11

Supply Chain Process

NFL leading its Export 45 – 46 countries including the following regions:

Middle East (Saudi Arabia, Bahrain, UAE, Qatar, Oman)

Europe (Denmark, Germany, Italy, France)

USA and Canada (Vancouver)

Asia Pacific (Tanzania, Nigeria)

Region wise recipe is same but packaging is different as per the law regulatory requirement of

the country i.e. Saudi Arabia wants to print only Arabic Language on their packages but on the

other hand UAE demands Arabic and Hindi both languages to be displayed on their packages.

NFL does not keep stock of packaging material due to rapid change in the format enforced by the

law regulatory bodies.

NFL deals with exports on Made to Order basis as the demand is created by the pull strategy, on

the contrary local market is catered by Made to Stock push strategy.

NFL export all the recipes passed through ETO process except in the European countries. ETO

process takes 22 days in order to filter the ingredients for recipes.

**ETO stands for Ethylene Oxide Gas, used to sterilize the medical equipment but also filters

packaging and product itself to kill Micro-organism that were left during production processes.

Local (Made to Stock)

Push Strategy

Demand Forecast Production Time for

completing the demand

forecasted

180 days earlier 60 days

`12

Export (Made to Order)

Pull Strategy

Shipment time after receiving

the order including ETO

process of 22 days

Reach the point of destination

after the shipment (By Sea)

45 days 70 – 90 days

National Foods Limited Products:

PRODUCT LINE

`13

`14

SUB Categories

DESSERTS

Recipe masala

RECIPE

`15

RECIPE MASALA JARS

RICE

fruitly

JAMS

`16

FRUITILY

CHINESE

SNACKS

`17

BASIC RECIPE

SALT

CHUTNEY & SAUCES

`18

GINGER AND GARLIC PASTES

GOLDEN FRIED ONIONS

MASALA SNAX

`19

3 P LT ra n s p o r t a t io n

O u ts o u rc e

D is t r ib u t io n

W a r e h o u s e

PICKLES

Logistical System or Tools

NFL used SAP integration for production and process planning but has manual warehouse

management system including shelving and picking.

`20

B id T a b

(a tle a s t 3 )

Q u o ta tio n

S a m p le

C h e c k

P u rc h a s e

O rd e r

M a te r ia l

R e c e iv in g

T IR

(T e c h n ic a l

In s p e c tio n

R e p o r t )

In v o ic e

B ill in g /

R O P /

C h e q u e

P a y m e n t

P a y m e n t

Supplier Selection Criteria Procurement Process

1. ISO Certified

2. Meet QC Standards

3. Environmental Friendly

4. Sensitive Monitoring of new suppliers

(for first three months)

5. Permit +/- 5% of standard sample size

6. Permit +/- 2% of material procured

In order to ensure the supplier standards in lien with the

NFL criteria, QC perform 4 surprising visit to each supplier

21

Demand & Planning Department

Forecast Production Planning

Material Resource Planning Suppliers

Procurement Material Acquisition

Processing of Raw Material

Packaging & LabelingBid Tab

Quotation Selection Sample Check Issuance of PO Material Receiving TIR Invoice

Manufacturing DepartmentSales &

MarketingFInance

ISO CertifiedQC Standards

Environmental FriendlyDelivery Quality

Local Market

Export

Raw Material (Crop Batch)

Packaging (Blanket PO)

GMS

Random Material

Inspection

SAP

Warehouse Management

System

KarachiOther parts of

Pakistan

TransportationOutsourcing

Distribution

Port Qasim (FGS)

MuridkeGujranwalla

Export (MTO)

Local (MTS)

WholesalerRetailer

Consumer / Customer

3PL

INBOUND LOGISTICS

OUTBOUND LOGISTICS

PushPull

Pu

ll

Push

Pull

PushPush

Push

Site Area (R&P)

Safety StockLabour OT

Supply Chain Model

22

Discussion on the phases of supply chain

Demand & Planning Department

The D&P will forecast the demand for each product line in collaboration with Sales & Marketing

and Finance department. The previous sales data will be extracted from the SAP which will

enable them to predict accordingly.

Production Planning

Once forecast has been received by the production department. They will go with the material

resource planning which includes production capacity, safety stock, calculation of workforce

overtime with the information generated via SAP.

Procurement

Material acquired by the procurement department from the suppliers looking at the Standard

Criteria and follows the procurement process. Suppliers are segmented in the context of local and

export products and bifurcated as Raw Material Suppliers, Packaging Suppliers and General

Material Suppliers. Random Sampling Check will be done after the required material received

and will be conveyed to the manufacturing division.

Manufacturing & Warehouse Management System

After the processing of Raw material it leads to packaging and labeling at Site Area, once

finished will be stored at the warehouse at Port Qasim (in case of Karachi) and finally conveyed

to the distributor. In case of warehouse located outside Karachi it will processed and directly

conveyed to the distributor for further dissemination in the market.

`23

References

http://nfoods.com/wp/wp-content/uploads/2015/09/annual-report-2014-15-national-foods.pdf

http://nfoods.com/

Mr. Abdus Salam (Manager, Supply Chain – Export Division)