Supply Chain of Mehran Foods Report

Supply chain of Mehran Foods

May 12

2015 SUMITTED BY:

HAMZA ULHAQ (0323)

ANAS IQBAL (0435)

M.NAVEED IKRAM (0992)

SAAD SIDDIQUI (1169)

M.OWAIS ARIF (0826)

MUHAMMAD BABAR PERVEZ (0573)

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Table of Contents INTRODUCTION ...................................................................................................................... 3

VISION ............................................................................................................................... 3

MISSION............................................................................................................................. 3

BUSINESS MODEL ................................................................................................................... 4

PRODUCT LINE ....................................................................................................................... 4

COMPETITIVE STRATEGY ......................................................................................................... 5

SUPPLY CHAIN PROCESS.......................................................................................................... 5

Supply chain model of mehran foods ....................................................................................... 6

SUPPLIERS: ......................................................................................................................... 7

PRODUCERS:....................................................................................................................... 7

WAREHOUSE: ..................................................................................................................... 7

DISTRIBUTORS: ................................................................................................................... 7

WHOLESALERS: ................................................................................................................... 7

RETAILERS: ......................................................................................................................... 7

PUSH AND PULL STRATEGY...................................................................................................... 8

DRIVERS OF SUPPLY CHAIN ..................................................................................................... 8

INVENTORY: ....................................................................................................................... 8

SOURCING: ......................................................................................................................... 8

TRANSPORTATION: ............................................................................................................. 8

LOCATION: ......................................................................................................................... 8

DECISION PHASES: .................................................................................................................. 9

SUPPLY CHAIN DESIGN: ....................................................................................................... 9

SUPPLY CHAIN PLANNING:................................................................................................... 9

SUPPLY CHAIN OPERATIONS: ............................................................................................... 9

PRODUCTION, PLANNING AND CONTROL FORECASTING TECHNIQUE AND TOOLS USED BY THE

COMPANY: ........................................................................................................................... 10

ROLE OF AGGREGATE PLANNING: ...................................................................................... 10

ROLE OF MPS IN THE PRODUCTION:................................................................................... 10

INVENTORY MANAGEMENT TECHNIQUES AND TOOLS ............................................................ 11

INDEPENDENT DEMAND.................................................................................................... 11

DEPENDENT DEMAND ....................................................................................................... 11

SOURCING............................................................................................................................ 12

VENDOR SELECTION CRITERIA:........................................................................................... 12

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DISTRIBUTION STRATEGY AND TRANSPORT NETWORK DESIGN ............................................... 13

PEST Analysis........................................................................................................................ 13

POLITICAL ......................................................................................................................... 13

ECONOMICAL: .................................................................................................................. 13

SOCIAL ............................................................................................................................. 13

Technological ................................................................................................................... 14

Porter’s Five Forces Model of Mehran Food ........................................................................... 14

Threat of new entrants...................................................................................................... 14

Bargaining power of suppliers............................................................................................ 14

Bargaining power of buyers ............................................................................................... 14

Threat of substitute product.............................................................................................. 14

Rivalry among competitors ................................................................................................ 14

REFERENCES ..................................................................................................................... 16

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INTRODUCTION

Mehran spices and food industry is an organization that was initially built at a small scale

in Pakistan, as a food processing and packing industry. In a very short period of time, it

has flourished into an increasing business.

At that time, the industry actually started the idea of ready-made spices and pickles was

not too much popular among the Pakistani people. The owner moved to Saudi Arabia and

Mehran began to export all of its products abroad. Mehran’s products and got a great

response from Saudi Arabia. It has been 35 years now that Mehran has been initiated and

it has gotten the best export in spices award for the past 27 years. In the past years

Mehran has now become a huge organization that manufactures a large variety of ready to

cook recipes, spices, pickles and so on. There are three units right now, one in tharparker,

one in Jeddah and one in Dubai. The main unit is however in Karachi that directs all the

other units. The latest achievement in this regard for MEHRAN SPICE & FOOD

INDUSTRY has been the ISO 9001:2000 certification.

VISION

“To be one of the best food products locally and globally that has and will continue to

provide quality food products to its consumers”

MISSION

“To promote and maintain Mehran spice and food industries as a quality food product

company, that is welcomed into people’s homes, hearts, minds, and their kitchens locally

and globally.”

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BUSINESS MODEL

Mehran food and spices is leading there organization because of their products and

availability of the products because of the competitors in the market. The major

competitors are Shan food and National food whose product lines are Bombay Biryani,

Qorma, Nihari, etc. similar to the Mehran food. So, the company works according to the

plan and keeping in mind about their competitors.

PRODUCT LINE

Straight spices in which includes:

Curry powder, Chilli powder, Black pepper powder, and etc.

Recipe mixes in which includes:

Biryani recipe mix, Qorma recipe mix ,nihari mix, and etc.

Pickles and Chutnies in which include:

Mix pickle, garlic pickle, mango pickle, and etc.

Deserts in which include:

Badamkheer, Sheer khurma mix, pistachio kheer mix and etc.

Rice in which includes:

Basmati kernel and Basmati sella.

Pastes in which includes:

Ginger garlic paste, ginger paste and garlic paste.

Pet Jar in which includes:

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Curry powder, Biryani recipe mix and Fish recipe mix, etc.

COMPETITIVE STRATEGY

They believe their competitive strategy is the superior quality of the products and

the attainment of the raw materials from the suppliers as they get the best quality of the

products which are passed through different stages of quality control and strict checking

from the Research and development department. Keeping in view the global success of

Mehran, the company was aim to establish itself in Pakistan as well. The spice market in

Pakistan is ever increasing and penetration into such a huge market is a difficult task.

However, Mehran was up to the challenge and established effective distribution system

successfully all over Pakistan. Today by the Almighty's grace & support from our

valuable customers, Mehran enjoys a leading position in the market place.

SUPPLY CHAIN PROCESS

Raw materials for Biryani and Bombay Biryani are purchased altogether. Mehran

maintains its strategic fit by never compromising on the quality so, the raw materials buy

for local and export are the same as they want the people here and out of the country to

have the same taste and superior quality for example: chilli powder obtained for the local

industry and export always be same for all the spices. All the spices are grinded together

and there is no difference between the local and export. The only difference is that the

packaging of the spice for the two markets.

Specifically for biryani masala the raw materials are stored in their own

warehouse. They have the grinders of 4 tons of capacity each. The raw material is then

fumigated which is a 72 hours process. Then they are grinded and fumigated again. After

72 hours of fumigation the process of packing takes place. With the help of machinery

and technology all the spices such as taezpatta and cardamom added as whole into the

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packet in appropriate quantity. No packing is done without quality guarantee. R&D

department balances if there is any fault in taste. R&D department performs cooking after

adding all the spices and then that is checked perfectly to obtain desired results. The

whole process is repeated again if there is any problem. The chillies used everywhere in

Pakistan are same and standard. Some are imported from India known as Sanam mirch

which is different and less spicy and reddish. Quality is maintained by Mehran in every

possible way. For example no additives or artificial flavors are added. The level of spice

to be used in each masala is maintained at an average as grinding is done in tons.

As the packages are made finally they are hand labeled according to customers and placed

in cartons. A 20ft container can have 1600 packets. The daily capacity is 4000- 5000

packets to be produced. Then they are labeled customer wise whoever wants how much

packets. Based on customer demand they are divided. All the stock is made and packed

overall only the master packing labeling is done in a different way.

Supply chain model of mehran foods

Supplier Manufacturer Warehouse Distributor

Whole sale &

retail

Push strategy of mehran

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SUPPLIERS:

They have fixed suppliers as they do not compromise on quality of the raw materials and

want to provide the best products in the market. Suppliers provide them the raw materials.

The raw materials for local and export are the same.

PRODUCERS:

Production takes place as the raw materials come to the factory. There is a single factory

of Mehran for local and export items. All the manufacturing is done here.

WAREHOUSE:

After producing the goods it goes to the warehouse. The company has a single warehouse

and it does not hold a lot of inventory in their warehouse because they manufactures

according to the customer demand and provide products on a daily basis. So, the company

saves a lot of cost to hold the inventory in warehouse.

DISTRIBUTORS:

As the production completes the final products are packed and given to distributors. The

export items are sent through sea to Jeddah or wherever the demand is from. For the local

market trucks are used. It is then the responsibility of the distributor to distribute

accordingly.

WHOLESALERS:

Mehran provides their products to the wholesalers in bulk quantity such as Hyperstar,

Chase, Metro, Imtiaz super market etc.

RETAILERS:

There are more than 60,000 shops in Pakistan where Mehran is available. They also have

more than 3000 retail stocks.

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PUSH AND PULL STRATEGY

The Mehran Company uses both push and pulls when they targeting the customers within

the country, then they are using push strategy because of strong competitors in the

markets. So, they need to provide every product on every retail stores especially on

seasonal occasions like Ramazan, Eid, etc. they are using lean manufacturing because

they want continuous improvement in manufacturing.

They also used pull strategy when the orders come from the abroad because they also

manufactured according to the demand. Mehran works on the policy of dealing with

suppliers three months in advance. So, the company delivers the finished Goods as soon

as possible. They are using JIT delivery.

DRIVERS OF SUPPLY CHAIN

INVENTORY:

Mehran is well-organized when it comes to inventory. They do not keep stocks of

inventory. They keep raw materials which they order every 3 months in advance from

suppliers then provide the customers with the products according to the demand. They

manage inventory everyday.

SOURCING:

Mehran is responsive in terms of sourcing. They have fixed suppliers so that there is no

compromise on quality.

TRANSPORTATION:

Mehran is cost capable in terms of transportation as they use the cheapest way of

transport for export which is sea and for local markets trucks are used.

LOCATION:

Mehran is responsive in terms of location as they are customer oriented. They have more

than 3000 stock retailers and there are more than 60,000 shops where Mehran is available

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in Pakistan. So they have tried their best to be responsive to provide Mehran to customers

wherever possible.

DECISION PHASES:

SUPPLY CHAIN DESIGN:

The first important decision is the supply chain designs that how the supply chain would

be designed in order to carry out production.

SUPPLY CHAIN PLANNING:

In this phase Mehran makes decisions of which and how the markets would be served.

Their distribution is accepted zone wise.

SUPPLY CHAIN OPERATIONS:

Supply chain operations takes place when the whole planning is done about how the

customer demands would be fulfilled. According to our interview the Manager told that in

Mehran planning is done in advance. The raw materials are booked by the suppliers 3

months in advance and seasonal too. The prices are set before the raw materials are

acquired and all the planning is done ahead of the production. As whole supply chain

depends upon the circumstances of the city which are uncertain.

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PRODUCTION, PLANNING AND CONTROLFORECASTING

TECHNIQUE AND TOOLS USED BY THE COMPANY:

As they are 3 month ahead they do backup planning. They work according to 3

months advance and seasonal. They ask seller that they need certain thing from them and

they do booking for that. They provide them purchase order. Everyone knows that the

closing is in June. Price is already set at one time. The rates of the vendors or export are

only fluctuated on government’s policy. The taxes depend upon government. Seasonal

items such as lemon, plum is done on crops. They have their own farms. Rates are

decided by the seller that whatever the crop would come in this season the rates are asked

by the company in advance. The rates depend upon the crops quantity.

ROLE OF AGGREGATE PLANNING:

Aggregate planning is a process by which a company determines ideal levels of

capacity, production, subcontracting, inventory, stock outs and pricing. It is the overall

planning done by a company to meet the demands of the customers. Mehran’s daily

capacity is of 3000-4000 packets. To carry out production they need to plan accordingly.

ROLE OF MPS IN THE PRODUCTION:

The production schedule for Biryani depends upon orders. If one month the

demand for biryani is less the production is done consequently. Mehran works on buyer

oriented technique. For example: Last February they did export of three hundred and

fifteen million dollars so it means that they would think of more export in the future and

so the export department would negotiate with the customers that this time we have to do

this much closing. Planning is done in advance.

According to the interview taken by us the Manager said that the production

preparation and all such things look good in books but practically speaking everything

depends upon situation like the stock is ready but there are no containers for lift up. Long

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term planning is done where there is free zone and the exporters are free to do whatever

they want to.

INVENTORY MANAGEMENT TECHNIQUES AND TOOLS

Inventory is managed day to day. They do not keep stocks of inventory as they

have booking of 3 months from suppliers for the raw materials so they do not keep final

products at the warehouse as inventory.

INDEPENDENT DEMAND

The final product is the close relative item which is the Biryani masala. Its demand is

linked with customers’ orders directly.

DEPENDENT DEMAND

The raw materials which are used for the production are the dependent ones as they

depend upon how much quantity of masala is to be produced.

An average has been set by the company of all the products which are used to complete

the package. As the production is done in tons so automatic machines are used which fills

the packets with a sure amount of all the products which are to be used.

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SOURCING

VENDOR SELECTION CRITERIA:

Selection of vendors is very important because of a number of factors such as:

Cost of materials

Reliability

Quality

Financial aspects

Innovation

Lead times

Mehran selects suppliers on the basis of the quality of the products. When the ram

material comes to the factory it is checked by the quality control department and if they

find some problem the whole trucks are sent back. therefore there are suppliers are few

but those who assure them of the best quality.

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DISTRIBUTION STRATEGY AND TRANSPORT NETWORK

DESIGN

All the export is done by shipments through sea. The local distribution is done

through trucks.

Distribution in Karachi is zone wise. They have their own distributors. Mehran

has a single warehouse from where distribution is done. There is a single warehouse

which is at Korangi so it fills up all demands like from Karachi to Khyber and others.

The products go from the warehouse to the distributors. It is then the will of the

distributors to distribute it as they want to. In Pakistan there are more than 300

distributors and sub distributors. There are more than 3000 stock retailers and more than

60,000 shops in Pakistan except Hyper star, Metro, Utility stores where Mehran is

available.

PEST Analysis

POLITICAL

Mehran run its operations by the government rules and regulations. But the instability of

political conditions like strikes, road blocking and load shedding that creates a lot of

problems for the company to deliver the goods on time.

ECONOMICAL:

Inflation rate of Pakistan is very much high so, the customers are not ready to purchase

the high price products. Mehran food provides the low cost products with better quality

among his competitors.

SOCIAL

Mehran food provides the quality products to their customers keeping in mind everything

that harmful for the society. The packaging the products are very good and also generates

the awareness about safety and healthiness

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Technological

The technology factor also effects environment. Technology brings competitive

advantages. The company uses ERP and SAP system to improve efficiency and to

achieve their goals.

Porter’s Five Forces Model of Mehran Food

Threat of new entrants

The overall structure of the industry is open and there is low barrier to enter in the

industry. So there is always a threat to the company as far as new entrants are concerned.

Bargaining power of suppliers

There are so many suppliers in the industry for raw materials of masala items so suppliers

has less bargaining power to the company and the company has a high bargaining power

to the suppliers.

Bargaining power of buyers

As far as the competition is high the bargaining power of buyers is low in the food

industry.

Threat of substitute product

There is always a threat of substitute products because of increasing pie of the market and

industry. Many substitute products are available that’s why threat is high for Mehran

Foods.

Rivalry among competitors

The rivalry is very high because there are so many competitors of Mehran Foods and

every individual company is working on reducing cost and increasing their quality to

increase their market share.

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REFERENCES

www.google.com

www.mehrangroup.com