Supply Chain Management Project Report

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Supply Chain Management

Final Project

Submitted To: Sir Ashiq Abbasi

Submitted By:

Ahmed Hasan (01-211062-005) Fakhar Zaman (01-211062-024) Hammed M. Mushtaq (01-211062-026) Mir Usman Iqbal (01-211062-036)

Bahria University of Management and Computer Sciences

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Noble Packs Carton Makers factory is located at Lahore in Farooq Industrial State at Ferozpur Road Lahore. It was established 1997. The main working of this factory includes manufacturing and trading of the finished goods i.e. cartons and rolls. Also supply of raw materials and semi prepared product is done. It is a customer driven company.

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Noble Packs was founded by Nazar Hussain in 1997. After retiring from the Pakistan Army, they shifted to Lahore. One of their friends advised him to visit another friend’s factory who taught them the carton making art and its workings. After learning all the major field aspects he started working on his own at a rented place with two machines for carton making. For first three months, the company received no order from any company. The first order was from the Rice mills for 400 cartons. After that orders started coming from the spinning mills and garment factories.

There are a lot of competitors. Over 2600 carton making factories are setup in Lahore out of which 1700-1800 are functional. The others are closed due some lawsuits and other problems. Out of the functional factories 700-800are the most active competitors but NOBLE PACKS edge is the quality of the services and the product.

After 6 years the company bought its own place and started working there. The company now owns 2 corrugators, 2 pasting machines, Rotary machines, slotting and pin machines.

M

ISSION

S

TATEMENT

Providing 'Quality Products, Excellent Service, Competitive Prices and Prompt Delivery'

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Noble Packs manufacture single ply, double ply, triple ply, five ply, seven ply corrugated cardboards to accommodate any shipping needs, They have different flutes to satisfy any specific requirements, also cartons can be printed with graphics in 1 to 2 colors printing and screen printing.

Their main products: Corrugated Cartons (RSC) of all sizes and types, Die-cut Boxes, Pined Boxes, Paper Packaging Products.

S

UPPLY

The company supply’s finished goods i.e. cartons as well as semi manufactured material called rolls.

The paper used to make cartons is of both imported and internal. Outside covering of carton is done by imported paper while inside covering is done from the home made paper.

Main suppliers of paper from outside Pakistan are Brazil, Sweden, Australia, Italy etc. Various types of papers are imported from various suppliers. Paper reels are imported that are on a later stage of manufacturing converted into rolls. Different types of papers are water proof and non water proof also representing different type of quality.

A carton is made from 3-7 ply’s depending upon the customer’s request. NOBLE PACKS manufactures cartons from the size of an iron to a Refrigerator hence making it possible to make any types of cartons. It supply’s according to the customer needs, as said earlier being a customer driven company.

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Customer demand is always known so production is done in reaction of customer needs. Certain customers are on-going customers always places order once in a month when their inventory needs replenishment. Like any company for the first time asks for 30000 cartons although it needs only 20000 cartons and keeps 10000 as safety inventory in case if NOBLE PACKS is unable to provide due to any problems. And the circulation continues every month after that with 20000 cartons.

The semi manufactured product i.e. rolls are bought and the respective company itself makes it into cartons by processing making NOBLE PACKS more efficient as it only manufactures half of the product and then sells it to buyers for other processing.

The papers imported from other countries are delivered to their Distribution Centers mainly situated in Karachi. After that the papers are acquired in accordance to their need in the factory through trucks. Also products delivered to the companies are delivered with rented trucks. The rent is divided among both the parties as per decided in the contract.

20 factories or more have no corrugator, that’s why they directly take the rolls from NOBLE PACKS.

Different types of raw materials are used as per instructions provided by the customers.

M

ANUFACTURING

The manufacturing process includes corrugators, pasting and rotary machines, slotting machine and Pin machines. NOBLE PACKS owns all these machines that’s why it supplies both finished and the semi manufactured product i.e. rolls to those factories or companies who don’t own corrugators for rolling function.

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The company owns 2 corrugators, 2 pasting machines, Rotary machines, slotting and pin machines and has the capacity to produce cartons of any size as well as any quantity. For instance, the company can produce more than 400000 carton rolls and cartons. However if the workload is more the company hires extra staff to lessen the load.

M

ANUFACTURING

P

ROCESS

:

The first step involved in the manufacturing process is done by the corrugators as shown in the Figure below.

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The corrugator converts the raw material i.e. paper reels into rolls making them 2 ply or 5 ply’s as required by the customer. Two paper reels circulates at one time and are joined together by sticking them together by adhesives like sodium silicate, starch adhesive. The two paper reels are pasted together with the help of the corrugator.

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PASTING MACHINE

The pasting machine pastes the two ply’s made by the corrugator with a third paper thus making a paper roll. This is a 3 ply carton. If the customer wishes to have a carton made up of 5 or 7 ply’s then the same 3 ply carton rolls is pasted with another 2 ply roll from the corrugator and so on if needed.

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ROTARY MACHINE

The Rotary machine bends the carton paper according the size desired by the customer. It consists of horizontal and vertical bending. Three things are kept in mind while determining the size of carton, its length, width and height. Also the waste paper is cut in the rotary machine. For example if the size of carton is 10/10/10 meaning 10 meter of length, 10 meter of width and 10 of height then 10 of height and 10 of width plus an extra 1 meter is added for fine finishing. Similarly 10 of length and 10 of width multiply by 2 plus 2 is done as carton is in a cube shape that’s why we multiply it with 2 for

finishing.

(10 + 10) x 2 + 2

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Length Width Extra paper for finishing

S

LOTTING

M

ACHINE

It eases the bending and is also used to cut the bends.

PIN MACHINE

As the cutting of the paper and their corrugation is in the form of sheets, the Pin machine is used to fold that sheet and convert that sheet in box shape cartoon by suture the one side of sheet with other one. The use of pin machine depends upon customer order. Some customers do not want pin in their carton. They prefer some glue material to attach the both sides of sheets.

After passing through all these machines the cartons are sent to the printing press for the printing of the cover of the product that needs to be put into it. The covers format is given by the customer company to the printer press.

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After printing the cover the carton is fully manufactured and delivered to the required customer and the contract is finished.

D

ISTRIBUTION

NOBLE PACKS does not have any Distribution Center. As it is situated in the heart of Industrial area of Lahore, it can supply directly to its customers from the factory. The customer places an order for cartons or rolls and the company sends it directly through trucks to factories for packing or more processing in case of roll supplying to those factories who cannot make rolls themselves but can do further processing needed after roll making. Thus by delivering directly to its customers, NOBLE PACKS have created a very good Customer Relation as well as goodwill for its good quality of cartons.

Distribution cycles are also determined by the customers who want to continue their supply monthly like if a company wants 20000 cartons, it’s up to them whether they want their cartons to be delivered monthly, weekly or daily basis.

The trucks are rented for making deliveries. Separate locations have separate truck rentals for example if any order comes from Sargodha Mills, trucks making deliveries from Sargodha to Lahore are hired as they also have to go back to Sargodha and don’t want to go empty. That same truck won’t be used for making delivery to Gujranwala but trucks that are available for Gujranwala region will be hired. Trucks for different locations are present for hiring.

It acts as a retailer also because it directly sells its product to its customers.

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C

USTOMERS

Customers being the most integral part of supply chain. The customer’s of NOBLE PACKS based on pull strategy. After receiving the customer orders, the manufacturing process starts. Main customers of NOBLE PACKS are as follow:

• KOHINOOR SPINNING MILLS

• CHAKWAL SPINNING MILLS

• BRIDO COSMETICS

• PHARMACEUTICAL COMPANIES

• ELECTRONIC GOODS MANUFACTURERS

NOBLE PACKS value their customers by being more responsive and efficient. Customer orders are fully satisfied by making an accurate

sample of their desired product design. Product designs depends upon the customers. Different Companies and factories have special need of

diverse size and shapes of cartons.

HOW TO CHOOSE CUSTOMER:

The first thing they do is get a list of all the companies, firms and factories that use corrugated cartons. Then the marketing starts, they visit each location and give them a brief introduction about their product, then ask them to try Noble packs. If anyone is interested in Noble Packs, they provide them with samples either printed or plain so as to tell them that this is the kind of product they are getting at this particular price. If Noble packs can provide them with a better quality product with low cost then they would love to do business with them. The personnel from

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Noble packs then bring the samples to the factory and then the samples are analyzed.

The factory provides the clients with some samples so they have an idea of the product that will be delivered to them along with a quotation. The samples are then examined and approved by the clients after testing for bursting power etc. The testing is done by applying pressure to the samples to check how much weight they can carry and at what level they will burst. If the sample is approved the order is then given to Noble Packs.

Customers are selected by first negotiating with them about their desired design. Terms and conditions are initially decided and then adapt them in written form. Financial matter regarding customer orders decided in this phase.

SAMPLE FOR CUSTOMER

NOBLE PACKS makes the samples of customer desired order and then after confirmation of the sample from the customer, the manufacturing process for the whole order starts.

SUPPLY TO CUSTOMERS

Customer orders are delivered according to terms and conditions as decided in contract. Delivery charges decided by both the parties according to contract. Large containers are usually hired for this purpose as cartons need unique temperature.

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C

USTOMER

O

RDER

P

ROCESS

D

IAGRAM

CUSTOMERS

(INDUSTRIES and FACTORIES)

WAREHOUSE

S

NOBLE

PACKS

Manufacturers & Distributors

SUPPLIERS

RAW MATERIAL

LOCAL

PAPERS

IMPORTED PAPER

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Noble Pack’s customers come from a varied range of industries including electrical, toys, food & drink and etc; their products are highly recommended and adopted by many national and international corporations.

Some of 0ther Major clients of Noble Packs are:

 Vimto  Grease

 Fruit Exporters

I

NFORMATION

H

ANDLING AND

D

ECISION

M

AKING

Proper organization of information is done. Proper planning is done before the company has to make decisions regarding new investments like producing huge orders or buying new machinery for increasing capacity of the facility. NOBLE PACKS focuses on both being responsive and cost

efficient.

Information infrastructure involves direct communication with its suppliers and to whom it is supplying. Flow of information, funds and product is done in all the stages of the supply chain. Information is provided to the supplier when an order is placed for raw materials acquisition. Funds are also flowed by NOBLE PACKS and the supplier delivers the product i.e. the raw material (reels).

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Contracts, purchase orders, material acquisition orders are all done on paper basis and in writing so that proof can be provided if any fault occurs. NOBLE PACKS maintains its information system on single computer based database system which includes the company’s all classified information relating its assets, its most loyal customers, order information, financial statements, budgets both current and forecasted.

The flow of information, product and funds when NOBLE PACKS acts as a supplier is when the customer places an order for cartons or semi

manufactured product. The customer provides information that when, how, where, how much, what is the product needed and also tells the price it is willing to pay for that order and product. Negotiations are done if any changes have to be made for any aspect of the supply chain as which delivery system must be used (air, road). Who will pay the rent? If shared, what will be its division? All this information is flowing through the supply chain during a single transaction. And product is afterwards delivered to the desired location.

D

ECISION

M

AKING

The company’s decision making is done with the consent of its

financial managers, lawyers, labor union heads and the Chairman itself. If the company is thinking of taking a huge order of making cartons a meeting is called of all the above mentioned people and opinions are taken. The

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financial manager provides information whether the company has the

financial resources to cater such an order, the lawyer makes the contract and check if there’s any unwilling clauses in the contract or any ambiguity that can make negative consequences. The labor union head provides information whether the labor number is enough to do the job or not. If not more skilled labors are hired for the specific job. All the decision making is done on the basis of having a proper information infrastructure and proper planning which NOBLE PACKS does not lack.

NOBLE PACK also makes decisions in respect of purchasing the raw materials from different suppliers. These decisions are in accordance with the financial basis as established by the Chairman. This means the NOBLE PACKS also behaves like a customer when making transactions with its suppliers. Noble packs makes decisions when it is behaving like a customer about paper quality from suppliers, Inbound transportation of raw material and about the space required for the raw material in the factory. Important decisions were made for timely fulfilling of customer orders which increases the NOBLE PACKS popularity in the market. The decision about facilities are also made by the NOBLE PACKS owner. He prefers the warehouses in the perimeter of factory which decreases its extra capacity cost.

In decision making, NOBLE PACKS thinks several times in order to align their manufacturing process and order fulfilling date. The maintenance of the factory and its machinery needs proper weekly decisions which enhances the life of the machinery. NOBLE PACK pays special attention in making

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decision regarding with its budget in which yearly budget is being made which included all the expenses and revenues of the firm. And all these decisions are made by the owner of the Noble Packs.

C

OMPANY

’

S

I

NFORMATION AND CAPACITY

C

ONTENTS

The company is situated in Lahore’s Farooq Industrial State at Ferozpur Road. It consists of two corrugators, two pasting machines, Rotary machines, slotting and pin machines. All these machines perform separately to make end product i.e. cartons. The company also owns 1 machine that performs the function of making cartons in just 1 place. This machine plays the role of all corrugators, pasting, rotary and pin machines.

The facility’s capacity is to produce any number of cartons from the size of an electric iron to an air split or refrigerator. The facility has the capacity to produce unlimited cartons provided that there is time. It can meet any orders of any number of cartons.

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All the information is handled by company manager as guided by the chairman. Information is passed to low level employees by managers about the working. Information regarding customer’s orders is completely operated by chairman of the NOBLE PACKS.

F

LEXIBLE

M

ACHINES

:

As mentioned earlier carton for electric iron to refrigerator can also be made as machines have flexibility of changing the length of cutting and pasting.

According to factories law, any production facility or factory must have a green corner in its premises so NOBLE PACKS also have a green patch inside its premises.

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NOBLE PACKS distribution network is highly responsive and efficient because customer orders are fulfilled timely. Distribution network of NOBLE PACKS is Manufacturer storage with direct shipping and manufacturer

storage with direct shipping and in-transit merge. In this Option, Inventory is held with the Noble Packs in warehouses which is located in the premises of factory. The raw material came from supplier is kept in factory warehouse and process along the manufacturing as per order of the customer. Customer orders are delivered through trucks from the warehouse. NOBLE PACKS saves its warehousing cost as warehouse is located in the factory.

NOBLE PACKS evaluates the impact on customer service and cost as it compares different distribution network options. The customer needs that are met influence the NOBLE PACKS revenues, which along with cost decide the profitability of the delivery network.

Although customer service consists of many components, we focus on these measures that are influenced by the structure of distribution network which is distributor storage with carrier delivery.

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M

ANUFACTURER

S

TORAGE WITH

D

IRECT

S

HIPPING

In this option, product is shipped directly from the NOBLE PACKS to the end customer. Information flow from the customer, via the retailer or agent, to the NOBLE PACKS, and the product is directly shipped from the NOBLE PACKS to the customers.

The biggest advantage of drop-shipping is the ability to centralize inventories at the NOBLE PACKS. One of another advantage which NOBLE PACKS have is that the retailer and agents level is also owned by them. Which results in the accurate inflow of information and accurate

manufacturing according to that information.

RESPONSE TIME

The response time of NOBLE PACKS by this distribution network is not so faster because it has only one warehouse which is in the premises of factory located at Lahore and also Response time may vary from product to product, thus complicating receiving.

PRODUCT VARIETY

NOBLE PACKS capacity of making different product for different customers provides large product variety. Because cartons are made in 3 -7 ply. It depends on customers to tell NOBLE PACKS which type of variety they want.

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P

RODUCT

A

VAILABILITY

It is easy for NOBLE PACKS to provide a high level of product availability Because of aggregation at Noble packs.

CUSTOMER EXPERIENCE

It is very good in terms of delivery to the customer’s place. But it is note good if customer requirement for carton is very high so the other manufacturer is needed to fulfill customer requirement.

T

IME TO

M

ARKET

If Noble packs designs some new kind of carton, then it can quickly show it to their customer because already the link between customer and NOBLE PAKCS.

O

RDER

V

ISIBILITY

It is more difficult for NOBLE PACKS to visible the location of order but also it is very important from the customer services prespective.

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R

ETURN ABILITY

As NOBLE PACKS manufacture only customized products by showing the sample first. By this there are very rare chances for return ability. If any one of the order would be returned then it is very expensive and difficule for NOBLE PACKS to implement.

This distribution network of NOBLE PACKS also effect the cost factors. The description is as follow.

INVENTORY

NOBLE PACKS inventory cost is very less because of aggregation of inventory at warehouse which is located in the boundary of factory. So there is no need to open other facility which increases the inventory cost,

T

RANSPORTATION

NOBLE PACKS has high cost of transportation because of increased distance and disaggregate shipping. As we wrote in our project that different order comes from different customers which is fulfilled according to the terms and conditions decided first. So different customers have different time of fulfilling order. Then the transportation would be according to that time. Which higher the cost. For example, NOBLE PACKS sends it transportation for order which is given at 20th_{of the month. And if} any order is given to 26th_{or 27}th_{, again the transportation will move to fulfill} that order.

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F

ACILITIES AND

H

ANDLING

NOBLE PACKS has lower facility cost because of aggregation of inventory at the warehouse located in the factory. Some saving on handling costs if NOBLE PACKS can manage small shipment or ship from direct production line. But this wont happens because there are too many orders to fulfill and handling of warehouse for these orders increases the handling cost.

INFORMATION

NOBLE PACKS information infrastructure is quite good because the agents and retailers belongs to NOBLE PACKS. And much of the information handled by the NOBLE PACKS itself. So there is no need to do significant investment in information Infrastructure to integrate NOBLE PACKS and its retailers.

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NOBLE PACKS STORAGE WITH DIRCT

SHIPPING

PRODUCT FLOW INFORMATION FLOW

KOHINOOR SPIINNING MILL BRIDO COSMETICS

CUSTOMER Customer

NOBLE PACKS

Manufacturers

Agent/Retailer of NOBLE PACKS

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O

UR

E

XPERIENCE

This project was a wonderful way for us to understand the importance and basic concepts of the subject being applied in practical life. It gave us a real world

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experience to help us in better application of what we have learned regarding this course and other management courses as well e.g. human resource management, marketing etc.

It was a very interesting and learning experience as we never thought what actually goes behind making a product. There are so many nitty gritty details to analyze that it is difficult for one to understand if one has not seen and analyzed the process in person.

We are grateful to our teacher Sir Ashiq Abbasi for assisting and supporting us whenever needed and also giving us such a wonderful opportunity to understand and explore a different side of the business.

R

ECOMMENDATIONS

After thorough analysis of Nobel Packs we came up with some recommendations which will help the company to excel. The recommendations are:

• As all the Manufacturing process is being done by manual labor, the company should now move toward Automation process by training their employees the skills and techniques. This shift will help the company in fast production by producing large orders in less time making the client more satisfied and responsive.

• The company should hire some Marketing expertise for it to expand nation wide according to the owner the finance is not the problem, the

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problem is to go in the market in search of clients so this problem is be solved by hiring marketing force which will help the company to get new clients and increase their business in terms of both Manufacturing as well as trading.

• The company is young so it needs to think over these issues mentioned above in order to grow and become more active in the market.

Supply Chain Management Project Report