Engro Foods

Institution of Management Sciences Project on:

Enterprise Resource Planning System of Engro Group

Presented to: Presented By:

Dedication

Dedicated To… Our Parents & Teachers Who Make this, And all things

Possible

ACKNOWLEDGEMENT First of all we are thankful to almighty Allah for giving us the strength, courage, tolerance and wisdom to bring this report to completion. The constant support of our family, friends and acquaintances has also been a big help. My teacher Mr. Arshad Manzoor was always there to help us and give us constant guidance and assistance and make us follow the right path and give us the right lead and boost up whenever needed. At Engro Foods Limited, we would like to mention the names of 1.

Mr. Zahid Mehmood.

(Regional sales manager)

2.

Mr. Muhammad Fiaz

(Sales operation officer)

Who told us what to do and how to do it, without their guidance this report would not have been possible. All the staff at EFL was very welcoming and helpful in nature.

BRIEF INTRODUCTION OF ENGRO FOOD LIMITED: Engro Foods Limited (EFL) has been established in 2005 as part of a diversification process at the Engro Group. EFL is a 100% Subsidiary of Engro Chemical Pakistan Limited. The plant located at Sukkur on 23-acre land, has the raw milk reception capability of 300,000 liters per day and UHT milk capacity of 200,000 liters per day. The plant has been established at a cost of Rs. 1 billion, which provides direct employment to 750 people. Engro Foods has entered the Food business through milk processing and sale with the company’s vision to pursue growth opportunities based on country fundamentals and own strength. It also positions the company to leverage its corporate social responsibility initiatives and work closely with rural communities to promote integrated farming and livestock development. This effort is expected to play a pivotal role in poverty alleviation and improving livelihoods of the poor in the milk collection areas. Engro Foods will work with the Pakistan Poverty Alleviation Fund and its three partner organizations to help implement sustainable business models that increase farmer’s profitability and develop a positive social and business climate for growth and expansion of livestock and other forms of value added agriculture.

VISION 2010 “To be the Premier Pakistani Enterprise with a global reach, passionately pursuing value creation for all stake holders”

MISSION STATEMENT (Our mission is two fold) “To help farmers maximize their farm produce by providing quality plant nutrients and technical services upon which they can depend. To create wealth by building new businesses based on company and country strengths in Petrochemicals, Information Technology, Infrastructure and other Agricultural sectors. In pursuing the mission we shall at all time be guided in our conduct and decision making by our Core Values.”

SALES SETUP OF THE COMPANY: The Company is operating 5 Regional Offices located in important cities of the Pakistan to handle the domestic business. These regions are

1. Karachi 2. Multan 3. Lahore 4. Rawalpindi 5. Peshawar Every region has its own RSM (regional sales manager). Rawalpindi region covers the following areas and have there own ASM’s (area sales manager).

Figure: Region hierarchy

Rawalpindi Region

Four areas

Rawalpindi area

Islamabad area

Islamabad

Jhelume area

Isd territory 2

Islamabad territory City town Murree town

Abottabad areas

Wah town

Taxila town

Hazroo town

Attock town

Source: Group Member own description

The total strength of the regional sales office stands at 21 person. The sales team is fully trained in handling all type of issues regarding to their product.

Distributor in Rawalpindi region Rawalpindi Area Al Barka Trading Rwp cantt RIMS Rwp city M&M Company G khan

Jhelume area R.Wali and sons Jhelume Jan traders Chakwal The trade way Mirpur Qureshi Brothers Kharian Al Karam traders Talagang Hammad Traders Kotli Ali Ashraf Dina

Abottabad area AA enterprises Abbottabad M yaqoob & sons Manshera Crown Trader

Islamabad area Asif & co Islamabad Ittehad brothers Murree Ishaq & son Wah cantt Al noor trading Attock

BRAND NAME: Olper’s (a derivative of All-Purpose) on an impulse from its name gives a feeling of being an imported brand and not local one (competition has positioned its products as a drink or to be used for tea). Thus, consumers may perceive this as a high quality and premium price brand. Engro Foods Limited has officially launched its UHT milk, Olper’s on 20 March 2006. Though the launch is no doubt aggressive, we understand that competition has turned even tougher. BUSINESS SEGMENTS BEING TARGETED: Figure:

Business segments

Trade

Services

Exports

Trade: As we have discussed earlier Engro Foods Limited is already engaged in the trade segment.

Food service: Engro Foods Limited is also engaged in the food services by supplying to PIA, RAILWAYS & ALLTHE MAJOR RESTURANTRS. Company is already supplying to the hotels; PSL was in contract with Nestle for the year but Nestle was unable to keep up the supply in this lean period E.F.L supplied the stock to some of these hotels. E.F.L has entered into contract with PSL and it will be supplying to a chain of hotels for the next year.

Exports: Engro is already considering exports to Afghanistan.

Figure: Business shares Trade Others

Source: Project Members own description

i.

Trade sector

ii.

Others (Food service& Exports)

80 % 20%

MAJOR PRODUCT LINES: At this time, Engro Foods Limited had two products and that are processed milk with cream. The processed milk was named Olper’s Milk the word derived from all-purpose and Olwell HCLF Milk was positioned in the market targeting the socio-economic class. The company is maintaining three SKU’s (stock keeping units) for Olper’s in tetra packs that are • 1000ml • 500ml • 250ml Two SKU’s for Olwell HCFL Milk that are; • 500ml • 1000ml MAJOR COMPETITORS: Engro Foods Limited is fully aware of its competitors. The company had to consider the areas including (product design, segmentation, target market, advertising, time to launch a new product, time for necessary changes & constant over view). The major competitors in case of offering the UHT milk are • • • • • • • •

Nestle HFL Millac Halla Prime Nurpur Nirala Dairy Crest

Other than the brand mentioned above Olper’s also faces an indirect competition from the local milkman the GAWALA.

CORE AREA OF PROJECT: WHAT IS ENTERPRISE RESOURCE PLANNING? An Integrated cross-functional software that reengineers manufacturing, distribution, finance, human resources and other basic business processes of a company to improve its efficiency, agility and profitability. INFORMATION SYSTEM: An information system can be any organized combination of people, hardware, software, networks, and data resources that collects, transforms and disseminates information in an organization. People have relied on information systems to communicate with each other using a variety of physical devices (hardware), information processing instruction and procedures (software), communications channels (networks), and stored data (data resources) since the dawn of civilization.

SYSTEM: A system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process. It has three basic interacting components or functions: • •

Input: It involves capturing and assembling elements that enter the system to be processed.

Processing: It involves transformation processes that convert input Into output

•

Output: It involves transferring elements that have been produced by the transformation process to their ultimate decision.

•

Feedback: It is data about the performance of system.

•

Control: It involves monitoring and evaluating feedback to determine whether a system is moving toward achievement of its goal. The control function then makes necessary adjustments to a system’s input and processing components to ensure that it produces proper output.

E.R.P System in Engro Foods Limited: As you know that EFL is a 100% Subsidiary of Engro Chemical Pakistan Limited. ECPL has made substantial investment in Information Technology. ECPL has its own dedicated Network of Intranet with a backbone of Internet & PTCL Fiber lines. Through this sophisticated & widespread intranet, All Business functions of E.F.L are integrated with each other like; • Production • Logistic • Accounts & finance • Marketing • Sales This Widespread intranet is also offering a platform for developing and deploying critical business applications to support business operations and management decision making across the Internet worked enterprise. Many customers application has been developed at ECPL, which helps in Order Processing Inventory Control Sale management & reporting And executive information system These applications are designed to interface with, and access, existing company database and legacy system. This software for such uses has been then installed on intranet web Servers. As we have mentioned earlier that in Engro Foods Limited we have 5 different regions. Employees at regional offices including Head office can access and run applications using web browsers from anywhere on the network whenever needed. The below mention diagram is showing different components of the widespread Network. HARDWARE RESOURCES IN ECPL: The hard wares used by ACBL are: •

PC

•

SERVERS DNS Server Proxy Server FTP Server Mail Server

•

ROUTERS

•

PRINTERS

•

HUBS

•

SCANNERS

•

PRINTSERVERS

NETWORKS RESOURCES IN ECPL: 1. Local Area Network: LAN is being used at all Regional office of E.F.L with Star Topology. Star topology is the most common topology in a star network, a hub is placed in the center of the network, and all nodes are connected to the hub and communicate through it. Data packets travel through the hub and are sent to the attached nodes, eventually reaching their destinations. All of the stations in a star topology are connected to a central unit called a hub.

HUB In LAN all PC’s are attach with TCP-IP

2. WAN (wide area network):

FIBER OPTICS There are Fiber Optic connections between head office and Regional offices of E.F.L

Firewalls Whole intranet is connected to a firewall for data security.

Routers LAN’s are connected with each other and with WAN’s using devices called routers. These provide fairly advanced routing functions at the network layer.

E.F.L SALES & DISTRIBUTION SYSTEM: This application helps in the accomplishment of daily sales operations & management. The application has five different modules i.e. 1. 2. 3. 4. 5.

Setup Transaction Query Report Administration

Remember, Sales operation officer has mainly concerned with two modules of the Sales & distribution system i.e. Transactions; This module helps to process, distributors Payment information, Secondary Sales, Order processing and their Claims. Reports; The Report modules convert distributors transactional information into different types of reports like

1. Regional Order Summary Report 2. Primary Sales Report both Invoice Based & order Based 3. Secondary Sales LPD Report 4. Primary & Secondary Day wise Report 5. Distributors detail Ledger 6. Distributors Payment Receipt Report 7. Stock Pending & Cancellation Report 8. Distributors Claim Summary Report 9. Logistics Reports 10. Distributor Account Statement Report

All above-mentioned reports can generate from different angles like • Regional report • Area Wise Report • Territory Wise Report • Distributor wise • Day wise etc

Reporting of the primary sales: Primary sales are updated as a result of “ORDER PROCESSING” .The regional office receives the allocation for next one day. The primary report shows us two factors that are value and volume. It shows us that how much target has been achieved up till now in the year considering 250ml, 500ml and 1000ml and total UHT milk. We divide the target achieved by the team up till now with target set. For example Year to date 6444 / 5161 = 1.2485(its mean that they are 25% ahead of their target) Similarly we can find the Month to date volume wise and also value wise Reporting of the secondary sales: First of all T.S.Os report all the secondary sales from the last day via fax as per company policy. These records are first updated manually. This gives us the record for the opening stock, stock received by the distributor yesterday, month to date sales and secondary sales. Than all the information given by the TSO’s is fed into (EFL Sales & Distribution Systems). Daily LPD variance report: This report shows the achievement of the regional office on the daily basis. In this report achievement is defined in the literage per day .We can easily understand it with this figure of Al- Barka trading Rawalpindi cantt the sales of 250ml. The primary sales LPD is 1231 Secondary sales LPD 869 Target LPD 3406 Now variance % Primary vs. target is 64% Secondary vs. target is 74 %( In both sales they are in negative) Payment procedure: Three instruments are considered for payment procedures: 1. Remittance plus. 2. Demand draft. 3. Pay orders. Remittance plus is highly acceptable. Every distributor has remittance plus request form when appointed he designates the branch of MCB. When Distributor places an order with regional office then deposit order amount in the described branch of MCB where Engro Foods has his universal account They send remittance plus through courier or through the TSO when the SOO receives the remittances he checks the authenticity and signs and stamps. After wards he updates the record manually on the system as well online so that head office also gets the information. As a result payment receipt report is generated which shows us the name of all the distributors who made the payments and weather the payment was sent via remittance plus our demand draft etc and name of the branches through which the remittance was sent.

After conducting the payment procedures another document is generated which is known as the Distributors Account statement summary. When distributor sends us the amount it is credited in our account as it becomes or liability that is because we have not delivered the stock yet. As the delivery is made the amount is debited accordingly. Now lets see how it happens for that please look at the distribution account statement summary of Asif & Co, now opening balance of Asif & Co was – 243,905 negative sign shows our liability when the stock moves from the plant the stock is debited in to Asif & Co account on the same time there were more receipts from Asif & Co which were credited this brings us to the balance amount the amount of stock in transit is subtracted to get the balance. Credit limit is added to get the net balance. Credit limit is given according to market standing. Distribution claim The distribution has to process all the claims before 6 th of every month on given formats. These claims are verified by the TSO’s and are sent to the regional office for verification after the verification at the regional office the claims are logged on to the system and are sent to the head office after verification from the head office the acknowledgement is sent to the distributor.

Recommendations: There is a need to create more ad hoc reports such 1. Different Claims report distributors wise & month wise Date wise & SKUs wise Distributor dispatches details Pending Claims Status report 2.