Supply Chain Management

Assignment No. 1

Submitted By

Raza Sajjad Hussain12350

Submitted toMr. Adnan Shehzad

Date: 8-March-2013Class: Friday 6-9

Haleeb Foods Limited (HFL)

The industry structure packed milk in the category is oligopolistic where there are a few

firms (Haleeb, Nestle, Engro, Good milk) producing essentially the same commodity.

Pakistan is the fourth largest producer of milk in the world, three-fourth of its total milk

is produced in the Punjab province.

Supply Chain Driver:

There are five supply chain drivers that are integrated with the motive to achieve

company’s competitive and supply chain strategy in optimal manners.

These supply chain drivers include:

1) Facility

2) Inventory

3) Transportation

4) Information

5) Sourcing

First three drivers of facility, inventory and transportation are logistical drivers, whereas

rests of three are known as cross-functional drivers.

These five drivers play a vital role in HFL’s supply chain process in order to achieve both

efficiency and responsiveness in fulfilling the market demand.

The brief description regarding theses drivers as tailored Haleeb Food is as under.

1. Facility

HFL have two facilities where all the products that include milk, cream, powder milk,

yogurt, tea mix and juices are assembled, fabricated and stored. These facilities are

located in the districts of Bhai Pharoo and Rahim Yar Khan.

Bahi Pharoo’s facility began operations in 1986 with the production of UHT milk, cream

and yogurt. While reorganizing and reinforcing the existing brands, new production lines

were installed like juices, Desi ghee, powder milk and Dairy Queen.

Rahim Yar Khan’s facility commenced in 2005 when HFL’s daily demand fetched to1.2

million litters per day. Recently, this facility is not being operated due to low market

demand.

These both facilities are located near to HFL’s big markets and its collections centers,

which really enable the company to get and make the supply of prime quality material.

Both of HFL’s facilities are equipped with advanced imported plants, which enable the

company to vary its production capacities according to market demand. Due to this

capability, achievement of economies of scales is not a hurdle. Besides, HFL’s intensive

distribution network delivers the products to distant areas where Haleeb Food plans to

create a market.

2. Inventory:

HFL does not carry large amount of inventory in its facilities and warehouses, gets

production through varied capacity and entire products are dispatched to market in 7

days.

While production of dairy items and juices, no inventory of raw material is kept, milk and

fruits are transferred to production facilities just after the arrival at plants. Similarly,

when the fabrication begins, it is not stopped at any cost until the last step of packaging is

performed; hence no work in process inventory is maintained. Only the finished goods

inventory is held at plant’s warehouses that too for very short time period.

HFL’s inventory control strategy enables the company to gain efficiency since minimum

inventory is held. This strategy also helps Haleeb Food in demonstrating a low cost

producer where the advantage of cost reduction methodologies is transferred customers.

3. Transportation

HFL is using only traditional fast moving road transportation modes in all the stages of

supply chain process. All the trucks at procurement stage are equipped with essential

technology that ensures the safe transfer of milk from PHEs to facilities. This mode is

adopted to achieve efficiency while reducing transportation costs in the movement of

products in all stages without any lose in quality and standards of products.

HFL Limited is emphasizing on both responsiveness and efficiency in transportation of

goods with an objective to carry final products to customers within the targeted cycle

time of 2 days by incurring as minimum cost as possible.

4. Information

HFL has designated an active Forecasting and Planning Department, which explores the

customer’s purchasing patrons and behaviors in each market and prepares a feasible

demand sheet on weekly basis. This report helps Procurement Department in assigning

targets to all Milk Collection Centers, routs through which a milk should be carried to

PHEs and then to production facility in Bhai Pharo. HFL also ensures the complete and

accurate information of trucks during their journey towards the facility, in case of any

accident or unfavorable circumstances, alternative sources are drastically used to avoid

any kind of lose.

HFL Limited also developed an Operations Team, which keeps up-to-date record of

inventory and new orders and shares with Head Office on daily basis.

HFL Limited has accessed to all necessary information technological tools like mobile

phones, internet, faxes, Enterprise Resource Planning and Supply Chain Management

Software to keep the full information regarding supplier’s and PHE’s capacity, total

production per day, delivery to warehouses and sales per day. This all information really

enables the company to be responsive and fulfill any uncertain demand within the time

span of 3 to 4 days.

5. Sourcing:

HFL’s entire manufacturing process of all products categories is performed in-house

facilities under the domain of company’s experts, since HFL is committed to provide

prime quality goods to its customers. Besides, HFL have a portfolio of suppliers

regarding all the fundamental inputs of milk, fruits and technology. Company believes in

long term and strong relationship with all of its suppliers by demonstrating mutual

respect, reliability, coordination and consultation.

HFL have a careful process as far as the selection of its supplier is concerned. For this

purpose, company’s agri-services teams visit all the rural areas and securitized all the

factors that are essential to perform prior to obtaining the superior quality inputs.

HFL’s basic objective is to achieve efficiency in its operations, for which company is

relying both on in-house and outsourced sources that will ensure the delivery of prime

quality products to market.