Peak Freens

SUPPLY C HA IN MA NAGE ME NT IN EB M BY SHERAZ MALIK NOUSHIN SALMAN

PICTURES

CONTENTS IN BERIEF

 EBM’s History  Vision  Values  Procurement Dept. Division 

Inventory purchases



General Items

 Working Criteria of MM Commercials  ISO 14000 (Environmental Management Systems) 

Solid Waste Management

 Application of Safety Stock 

Safety Stock Application in EBM (FGS)

 EBM’s Products  EBM Revenue  EBM Product Mix  Market Share  Pictorial Representation of the Supply Chain  Production Functions 

Material Receiving



Production Process



Production Step 1: Mixing



Production Step 2: Cutting



Production Step 3: Baking



Cooling (Buffer Zone)



Production Step 4: Packaging



Dispatch



Export

 Procedure For Supply Chain 

Procedure for Evaluation of Supplier



Procedure for Procurement of Raw/Packaging Material, Technical and General Items



General Procedure



Raw Material Procurement Planning and Management



Packing Material Procurement Planning and Management



General, Technical and IT Items Procurement



Imported Items Procurement Planning and Management

 Recommendations

EBM’S HISTORY English Biscuit Manufacturers (Private) Limited was established as a joint venture company in 1965 with the name of Peek Freans Pakistan Limited. In 1966, the UK sponsor company was renamed Associated Biscuits International Limited (ABIL), while the venture was renamed English Biscuit Manufacturers (Private) Limited (EBM), which stands to date. EBM started manufacturing and marketing the world famous Peek Freans range in 1967 in order to provide Pakistani consumers with nutritious and hygienically packed biscuits of the highest quality. True to its corporate claim, 'The Legend Leads', EBM has led the biscuit industry in Pakistan for 39 years by playing a pioneering role in providing innovative and high quality biscuits for every taste bud. EBM’s trademark, Pied Piper, made its mark three and a half decades ago, but continues to remain in the hearts, minds, and souls of the people through the variety and excellent quality of biscuits manufactured under its umbrella. EBM enjoys the distinction of being the first food company in Pakistan to promote biscuits as 'food between meals'. EBM has been in the business of manufacturing and marketing branded biscuits in Pakistan for 39 years. The brand name 'Peek Freans' is a household name, and people trust and believe in the quality of the products produced under this brand. EBM is also the first biscuit company in Pakistan to have achieved ISO - 9001 Certification in correspondence with its institutional slogan 'The Legend Leads'. The achievement also endorses the company's firm commitment to high standards of quality. Under the brand range, Peek Freans, the company today carries the largest variety of biscuit products including Marie, Gluco, Click, Sooper, Smile, RIO Double Treat, Marvell, Party, Peanut Pik, Peanut Pista, Lemon Sandwich and Chocolate Sandwich. English Biscuit Manufacturers (Pvt) Ltd., or (EBM), is the country's leading manufacturer of biscuits and cookies since 1967, with an annual sales volume and production capacity of more than 65,000 tons and a turnover of more than Rs. 7.0 billion. EBM is the only Company in the industry to have achieved recognized international certifications pertaining to quality control, environmental management system and

human resources management, including ISO 9001:2000, ISO 14001:2004, HACCP certifications and IIP (Investors in People) Recognition. EBM is also the only food company to have been awarded Environmental Excellence Award for four successive years 2004, 2005, 2006 & 2007. As a socially conscious company, EBM consistently supports various humanitarian causes in the areas of education, sports, healthcare and help for the less privileged.

VISION  To provide high quality value-added food to contemporary and future generations  To constantly endeavor for the acquisition of knowledge and excellence in developing human skills, product innovations and state-of-the-art technologies  To be a good corporate citizen by giving back to the community and improving the lives of the underprivileged  To dispense equitably, fairly, and with compassion, the fruits of success among our “partners in business”  To become a partner with the Government in sharing the responsibility of economic and social uplift and development of Pakistan

VALUES  We believe that no individual is bigger than the institution  We believe in integrity, transparency and commitment as our cultural ethos  We continually adhere to the highest standards of hygiene and ecology  We believe in governance in human face  We protect and promote the cause of the environment  We emphasize on employee welfare  We believe in leading and innovating in all aspects of business

PROCUREMENT DEPT. DIVISION

Inventory purchases Raw material is purchased on the basis of forecast made by the marketing department; raw material is purchased after the quotation from supplier. Mainly flavors are outsourced from the best in class vendors like IFF and Gevidaun; other raw materials include dry fruits, eggs, sugar, flour, fat and butter. Packaging material is sourced from the local market depending on the nature of the finished products; it includes inner films, outer films and master cartons. Once the consignment of the supplier arises; it is recorded in the ERP system through MNR (Material Receiving Note) and issued to production through MCN (Material Consumption Note). General Items Items like stationary, computer accessories, engineering tools needed in electrical, mechanical and civil worker is purchased. The category of general items has been distributed to different official related to nature of job. Demand note is prepared when there is a need of general item in the ERP system (Inventory and Procurement Management)

EBM compliance with a paper less organization methodology and each document is recorded in their module of Inventory and Procurement management Electrical appliances are purchased after negotiation by the suppliers; every purchase has a purchase order prior to the purchase.

WORKING CRITERIA OF MM COMMERCIALS Forecast (MKT) Material Planning Supplier Enquiry

Mailing

Quotation

Opening of LC Purchase Order Raw/Packaging received QA sampling Accepted

Rejected

Stored through MNR

Sent back to supplier

ISO 14000 (ENVIRONMENTAL MANAGEMENT SYSTEMS) Solid Waste Management Since the introduction of ISO 14000 in 2005 EBM saves around 2 million annually. These standards deal with Solid Waste Management and Water Treatment Plant. EBM requires around millions of cartons for packaging purpose so corrugated cartons are sold to different vendors once not in use, sacks of sugars and flours are also sold to vendors once raw material has been used. Waste of biscuits on daily bases is crushed and supplied as cattle feed.

APPLICATION OF SAFETY STOCK Safety stock is now becoming a major issue for every process industry globally, weather in the form of raw material or finished goods. It depends how effective a supply chain is for an organization. When it comes to raw material, inventory is build up when prices tend to go high or there is a chance of uncertainties Many process industries tat employ Mass Production tend to keep safety stock in their warehouse and also their sole distributors. Levels of inventory are maintained on for to six weeks. Safety Stock Application in EBM (FGS) Although EBM does employs safety stock methodology but due to lack of space they are bound to do it. FGS store has a maximum capacity of 90000 master’s cartons but on average 15000 masters cartons are dispatched on daily bases versus 15000 units of production. Also transfer is taken from production on daily bases due to which there is a bottle neck in dispatch of finished goods. There should be an expansion in FGS so that volume of finished goods can be increased.

EBM’S PRODUCTS Marching ahead of the competition, Peek Freans biscuits are best known for their excellent quality and taste. The Pied Piper symbol is the most popular icon in the country, leading biscuit lovers to experience one superb product after another.

Offering the largest variety in taste and textures, Peak Freans produces thousands of tons of premium quality biscuits annually, employing the most innovative ideas, state-of-the-art technology and sophisticated Food Safety Systems. Plain Sweet Biscuits Gluco Marie Sooper Whole Wheat Slice Nuts Peanut Pik Peanut Pista Cream Biscuits Choco Vanilla Sandwich Chocolate Sandwich Lemon Sandwich Rio Double Treat Chocolate/Vanilla Rio Double Treat Strawberry/Vanilla Rio Vanilla Crackers Butter Puff Marvell Saltish

EBM’S REVENUE 350000 300000 in Billion

250000 200000

Net Sales

150000 100000 50000 0 03-04 Y

04-05 Y

05-06 Y

06-07 Y

EBM’S PRODUCT MIX Rio Variant Party Butter Puff Gluco Peanut Pik Munna Marvel Other Sooper

MARKET SHARE

9% 16%

55% 20%

EBM Kolson LU Continental Bisconni

PICTORIAL REPRESENTATION OF THE SCM Receiving Raw Material

RM Unload in Quarantining Area

QA Inspection

Rejected by QA

QA Inspection

RMS Store

Cold Room 1

Flour/Sugar Grinding

Mixing Storage Area Mixing Process Hopper Cutting Baking Packing Master Cartons Filling QA Packing / Coding QA Inspection Transfer and Storage in FGS Distributors Retail Shop

Customer

Nuts Cleaning/Grinding

Weighing Area

PRODUCTION FUNCTIONS MATERIAL RECEIVING  Supply Chain contact approved suppliers and purchase raw material from them.  Supplies come through trucks. In case of some materials, material is not off-loaded without testing.  Sampling and testing is carried out by QA personnel. Composite sample is collected to get good results.  After approval, incoming material is stored in raw material store and packaging material store, whereas sensitive items such as butter, color, flavors are stored in cold rooms.  In rest of the cases, Quality assurance performs testing after material is stored in relevant stores and then accepts/rejects the material. PRODUCTION PROCESS  Information for daily production plan is supplied by marketing and sales department on the basis of customer demand. Keeping in view these factors, production plan is made. PRODUCTION STEP 1: MIXING  There are six different mixing areas.  For a specific product, ingredients are weighed (according to predefined recipe) in weighing area.  Mixing is carried out in either vertical or horizontal mixer, depending upon the nature of the product. PRODUCTION STEP 2: CUTTING  After mixing, dough is transferred from hopper to cutting line.  There are total 6 lines, which are reserved for different products.  Dough passes through the conveyer belt and is shaped according to product.

PRODUCTION STEP 3: BAKING  Unbaked biscuits enter the oven, conveyer belt is constantly moving at a slow pace.  Different types of heating devices are present in oven which provides different temperature.  Approximately 6 minutes are passed in oven during which different temperatures treatment are given to biscuits starting form lower to higher temperature.  Conveyer belt then moves to Buffer Zone. COOLING (BUFFER ZONE)  After high temperature treatment baked, biscuits are not very stable and texture is not fully developed, that’s why they are passed through Buffer Zone for cooling.  It is merely an area consisting of relatively low temperature. Conveyer belt containing biscuits passes through this area to cool down the biscuits. PRODUCTION STEP 4: PACKAGING  After cooling, workers pick the biscuits for conveyer belt and place them in different gauges set according to Ticky Pack (TP), Snack Pack (SP), Half Roll (HR) or Family Pack (FP).  Biscuits are automatically packed in final packaging material (inner sealing) incase of TP, SN, HR, and then are finally packed in master cartons.  FP is packed in 3 different packaging material; inner sealing, outer sealing and then finally master carton.  Master cartons are sealed and are transferred to finished goods store. DISPATCH  Products are stored in finished goods store according to date are dispatched on FIFO (First in First Out) basis.  QA performs final checking of finished products, after which product is dispatched through trucks to different distributors.  Distributors further distribute the product to retailers.

EXPORT  Peak Freans products are also exported to different countries of the world including USA, UK, and Canada etc.  Export order is raised from sales and marketing department.  Export order contains the name, type, quantity, packing specifications of the product.  Supply chain and production is enquired whether they can produce the required amount of product in limited time.  After their approval, product is manufactured according to specifications defined in export order.  Product is packed in containers which are shipped to the destination.  After custom’s clearance, containers are delivered to address mentioned on the export order.

PROCEDURE FOR SUPPLY CHAIN Procedure for Evaluation of Supplier  Supplier is evaluated on the basis of range of products and services he provides.  The supplier is required to furnish details of his quality system.  Supplier performance is evaluated be Supply Chain Dept.  Supplier’s end survey is to be conducted upon requirement. If the system/ supplies are not flowing properly then it needs to be addressed through site survey.  Based on the information gathered supplier is approved / rejected. Procedure for Procurement of Raw/Packaging Material, Technical and General Items General Procedure  Procurement of Materials is done on the basis of Annual Sales Budget  Raw & Packaging Materials are purchased from Approved Suppliers only.  Approved Standard Specifications of all materials are given to suppliers

 Negotiation of prices of various materials depends on quantity purchased in a certain period. Rates of various materials vary at different interval. For locally purchased items, normally one month credit period is allowed except for few items which payment is made on delivery. In case of Engineering / IT / General Items, the payments terms are negotiated on case to case basis. Raw Material Procurement Planning and Management  Requirement is computed on the basis of Weekly Production Schedule  Purchase Order is issued to Local Suppliers with all terms and conditions and specifications / credit record  After Receipt of Material QA department collects the samples of receipt material and verifies them  If the material is rejected by QA, the rejected materials are returned to the supplier  Bills are received at MM Department from the suppliers and sent to Finance Department Packing Material Procurement Planning and Management  Monthly Requirement is generated on the basis of Comprehensive Report on periodic basis  Purchase Order is issued to Local Suppliers with all terms and conditions and specifications / credit record.  After Receipt of Material QA department collects the samples of receipt material and verifies them  If the material is rejected by QA, the rejected materials are returned to the supplier  Bills are received at MM Department from the suppliers and sent to Finance Department General, Technical and IT Items Procurement  Demand Note is received for purchase of General / Technical / IT equipments.  Required materials are arranged from on spot market buying  Purchase Order is issued  Material is received by concerned Stores  Bills are received at MM Department from the suppliers and sent to Finance Department

Imported Items Procurement Planning and Management  Requirement for Imported Raw Material is generated on period basis  A letter is sent to supplier or their Agent in Pakistan and Price / Rate is negotiated  Application is sent for L/C to the bank  Copy of L/C is sent to Supplier through courier / fax.  Negotiable documents are received from our bank  Clearing Agent arranges for clearance of consignment and delivery at EBM  Bill of Clearing Agent is sent to HOD for approval.

RECOMMENDATIONS  Raw Material should be stored according to FIFO which avoids bottle neck in dispensing the raw material  Raw Material should be kept at 20 feet away from main entrance, because once the gate opens there are chances of pesticides entering the store.  EBM should deploy self distribution in spite of hiring on contractual bases, this will leave a positive perception on the consumers mind once they see transport vehicle of the company.