Supply Chain Management

Report Submitted to:

Sir Ibtihaj Khan

Group Members
Faizan Salim Khemani
Shamsher Shiraz
Ammara Usman
Hassan Ali
Nawaid Ahmed Siddiqui

Contents
Introduction to the National Foods ........................................................................................................ 1
Vision Statement .................................................................................................................................... 1
Mission and objectives ........................................................................................................................... 1
Production .............................................................................................................................................. 3
SITE Area Karachi ............................................................................................................................. 3
Port Qasim.......................................................................................................................................... 4
Muridke .............................................................................................................................................. 4
Competitive Strategy ............................................................................................................................. 5
Planning Strategy and Goals .................................................................................................................. 6
Organizational Organogram ................................................................................................................... 7
Business Model ...................................................................................................................................... 8
PEST Analysis ....................................................................................................................................... 9
Political/Economic Conditions........................................................................................................... 9
Social Activities Conditions ............................................................................................................... 9
Technological Analysis ...................................................................................................................... 9
Competitors Analysis ........................................................................................................................ 9
PORTERS 5 FORCES OF NFL ......................................................................................................... 10
Rivalry among competing firms....................................................................................................... 10
Potential entry of new competitors .................................................................................................. 10
Potential Development of substitute products.................................................................................. 10
Bargaining Power of Suppliers ........................................................................................................ 10
Bargaining Power of Consumers: .................................................................................................... 10
Supply Chain Process .......................................................................................................................... 11
National Foods Limited Products: ....................................................................................................... 12
PRODUCT LINE ............................................................................................................................. 12

SUB Categories .................................................................................................................................... 14

DESSERTS ...................................................................................................................................... 14
Recipe masala................................................................................................................................... 14
RECIPE ............................................................................................................................................ 14
RECIPE MASALA JARS ................................................................................................................ 15
RICE................................................................................................................................................. 15
fruitly ................................................................................................................................................ 15
JAMS ............................................................................................................................................... 15
FRUITILY ....................................................................................................................................... 16
CHINESE ......................................................................................................................................... 16
SNACKS .......................................................................................................................................... 16
BASIC RECIPE ............................................................................................................................... 17
SALT ................................................................................................................................................ 17
CHUTNEY & SAUCES .................................................................................................................. 17
GINGER AND GARLIC PASTES .................................................................................................. 18
GOLDEN FRIED ONIONS ............................................................................................................. 18
MASALA SNAX ............................................................................................................................. 18
PICKLES ......................................................................................................................................... 19
Logistical System or Tools .................................................................................................................. 19
Supplier Selection Criteria

Procurement Process ............................................................................ 20

Supply Chain Model ............................................................................................................................ 21

Discussion on the phases of supply chain ............................................................................................ 22
Demand & Planning Department ..................................................................................................... 22
Production Planning ......................................................................................................................... 22
Procurement ..................................................................................................................................... 22
Manufacturing & Warehouse Management System ........................................................................ 22
References ............................................................................................................................................ 23

Introduction to the National Foods

National foods established in 1970 as a spice industry, with the concept of providing healthy and
clean food products. NFL initiates easy to cook concept to make life easy for the household
women so that they could have more pleasing life style. NFL came in long before the concept of
corporate mission evolves in the market. NFL tries to cope with the challenges of bringing in the
diverse and innovative products but simultaneously retain the traditional values as well.
In the history of 4 decades since NFL establishment, its success remain uphold under the most
influenced events such as economic crises, global terrorism activities and rapidly changing
technological advancement and its vision still state the development of product for changing
consumer life-style.

Vision Statement
NFL wants to be a company worth Rupees 50 Billion by the end of year 2020 in the expediency
food industry by expanding its product line and penetrate more into the local and global markets.
It focuses on creating a high value for their customers by means of management core
competence and effort.

Mission and objectives

Supporting its vision of becoming 50 Billion rupees company by 2020 they already set their long
term goals and focusing more on its top brands for the global expansion. NFL annual report for
the year 2014 indicates that NFL grow by 15% and in last five year its turn-over is doubled
shows a favourable operational environments despite of having economic recession.

NFL is also devoted for their customer attractiveness in a view of uplifting its share-holder value,
their priority is to strengthen their star brands by keeping the cost low, making the operation
simple and become more responsiveness in terms of consumer demand without compromising in
the its quality.
NFL inbounds a relation with its consumers by having a cultural inheritance having a huge
portfolio including the typical brands that keep them connected.
NFL persuaded that the by means of excellent quality and amazing infrastructure, the vision of
2020 will definitely be achieved. They also built their talent pipeline and initiate for becoming
agile and flexible organization comparatively.
NFL attempted to gain more consumers in the local and international markets with the help of
tremendous operational performance through their supply chain activities and keep delivering its
best until NFL become customers number 1 choice.
The dedicated workforce plays a vital role in NFL success and they believe of investing more on
human resources by providing them an ideal working atmosphere which helps them unleash its
maximum potential in terms of NFL growth and productivity.
They focus on delivering successful sales strategies with quality standards and innovations
evident its sales expansion from Rupees 20 million in the year 1993 to Rupees 14 billion in the
year 2014. Its capitalization also increases from million 20.57 in the year 1993 to billion 40 in
the year 2014.
NFL is also a supporter of CSR activities as an Adult Literacy Program as launched for its
employees in early 2000 and soon spread across all business function in its board till now.

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NFL believe that global penetration will not only beneficial for the company but also contribute
in the economy of the country as a whole. They plan to deploy profitable reserves upon the new
upcoming projects to secure future growth and market share.

Production
The National foods has its operational capacity to meet its future expansion plans and to meet the
demand. NFL has three operational divisions located at:
SITE Area, Karachi
Port Qasim, Karachi
Muridke Punjab
Gujranwalla, Punjab
The finished goods are stored only at Port Qasim Warehouse in Karachi from where it further
disseminated to the distributors.

SITE Area Karachi

The Paste Plant team was effective in implementing numerous projects for process
improvements and production enhancement, ensuring its contribution towards strategic business
progress. The process of the 3.25 kg and 100 gm sachet machine was transformed from a purely
manual work to the semi-automation leading in increased productivity and efficiency of the
machines.
The stimulation of high speed shearing mixing pump, high pressure washing device and two
sided carton taping machine has helped in the reformation of the processes, making it more
efficient with improved quality of production.

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Furthermore, the productivity of the Salt Plant has significantly increased by 29%, leading to
wastage reduction upto 6%. These efforts were also supported by organizing informative
awareness sessions for the factory staff. In order to improve our working environment and
making it more conducive for the production an in-house dust collection system has also been
installed. Recently, on a trial and error basis, NFL acquired an external warehouse to meet its
demand for material warehousing. This warehouse has been transformed into a world class
storage unit, receiving 99% score in Goods Manufacturing Processes audit.

Port Qasim
During 2013-2014, the Port Qasim team successfully implemented various process enhancement
projects which lead business to grow. These projects ranged from efficient processing and
cutting of Mangoes, recycling of brine wax and sugar bags to eliminate unnecessary raw
materials and significant cost savings in our system

Muridke
Muridke plant has successfully amplified the capacity of its Salt Plant by installing a new
grinding and sieving line. After installing the plant, now NFL ensures its production to be
completed in two shifts, with the plant capacity enhanced to 90 MT per day from 57.6 MT which
was carried out in three different shifts. This project will help in restricting additional freight cost
and save approximately 9 million rupees annually.
Moreover, the Muridke team has successfully carried out 70% of the fabrication, civil and
electrical tasks in-house, leading to substantial savings during the execution of the project.

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In line with the Plants OHSAS certification, we are also planning to obtain Food Safety
Management System ISO 22000, 2005, certification. In order to pursue this objective, we have
additionally invested rupees 2.5 million to strengthen the infrastructure of the plant.
Lastly, the payroll system and attendance of the workforce including the third party workers is
now logged through swipe card, which ultimately linked with the HR payroll system, resulting
both the payroll and attendance recording processes more effective and transparent.

Competitive Strategy
As we know that Shan and Mehran are the two main competitors of NFL. Shan and Mehran has
an edge over the export, whereas, on the other hand NFL has a strong distribution channel of
approx. 245 distributors throughout the Pakistan, except Karachi which proves to be their
competitive advantage over the rest. Furthermore, NFL has segmented Planning and Sales team
region wise and area wise locally.
Secondly, NFL plan to sustain its local market share by further strengthen their distribution
channel and simultaneously penetrate in the global market in order to be a leader in the export
comparatively.
Lastly, NFL wrap up their forecast of all respective production units for the forthcoming month
before the 20th of the ongoing month.

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Planning Strategy and Goals

In this modern era where the life is fast paced, carrying out business decisions has a significant
impact of technology, as we also know that to cope with the latest technology in this fast
growing world is necessary for the existence. Forecasting, and tactical approaches are now relied
upon sources of available information. Exact usage of the facts can influence and remunerate the
outcomes of business leads towards the business growth, improved market share and profit, and
most importantly to portray the image of brand in line with their desired perception accepted
around the globe.
NFLs desire to be a market leader in the local and international food industry cannot be
achieved without the proper use of technology. In-fact, the rapid and sustainable business growth
can only be accomplished through the constant usage and the enhancement of adaptive
technology according to the modem organizational practices.

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Organizational Organogram

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Business Model

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PEST Analysis
Political/Economic Conditions
Commercial fluctuations, extremist activities and governmental turbulence may cause business
disruption, inflation, deflation or reduced demand for NFL food products. Success will rest on
the organization's capability in managing continual worldwide political and/or economic
insecurity, prominently in substantial terrestrial markets, as well as any governmental or
economical disturbance due to extremist and other unreceptive happenings

Social Activities Conditions

The instabilities or changes in social /cultural happenings in the zones of operations may also
affect the National Foods business activities.

Technological Analysis
The modernization and evolving of innovative products is the evidence that NFL possesses
modern advancement and dedicated workforce that has empowered them earns higher reputation
in the international market.

Competitors Analysis
NFL has also kept their eyes on their competitors to analyze the happenings in the industry. NFL
concentrates strictly on the capital investments, enhanced inventory measures, and to be efficient
in reducing overall cost by means of identical manufacturing platforms etc. Their major
competitors are Mehran and Shan industries.

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PORTERS 5 FORCES OF NFL

Rivalry among competing firms
NFL is facing competition against renowned organizations i.e. Shan and Mehran industries. To
gain the competitive edge over the aforementioned organizations, NFL not only needs to
improve their products but also supplemented various add-ons through technological
advancement such as implementation of SAP for the purpose of production planning and
manufacturing.

Potential entry of new competitors

In this age of technical advancement, several new companies are penetrating into the food
production industry furnished with excessive features, which may also compel many existing
firms to sustain its market status. NFL is also having rivalry from Mitchells in sauces.

Potential Development of substitute products

Fortunately for NFL, there are not many substitutes of their products available in the market. For
example there is no reputable substitute for pickles, spices or sauces.

Bargaining Power of Suppliers

NFL has an agreement with its providers in almost all domain of its process, NFL provide
evidence to its existing suppliers for building better understanding and relationship with them.
The tactical collaboration with its providers has positioned NFL in reducing total cost and also
enriches the class of materials being delivered.

Bargaining Power of Consumers:

NFL concentrates towards its services in achieving its customer loyalty. NFL also offers worth
products in economical market prices to its customers, which in return proved NFL to be
successful for such a long duration since its inception.

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Supply Chain Process

NFL leading its Export 45 46 countries including the following regions:

Middle East (Saudi Arabia, Bahrain, UAE, Qatar, Oman)

Europe (Denmark, Germany, Italy, France)

USA and Canada (Vancouver)

Asia Pacific (Tanzania, Nigeria)

Region wise recipe is same but packaging is different as per the law regulatory requirement of
the country i.e. Saudi Arabia wants to print only Arabic Language on their packages but on the
other hand UAE demands Arabic and Hindi both languages to be displayed on their packages.
NFL does not keep stock of packaging material due to rapid change in the format enforced by the
law regulatory bodies.
NFL deals with exports on Made to Order basis as the demand is created by the pull strategy, on
the contrary local market is catered by Made to Stock push strategy.
NFL export all the recipes passed through ETO process except in the European countries. ETO
process takes 22 days in order to filter the ingredients for recipes.
**ETO stands for Ethylene Oxide Gas, used to sterilize the medical equipment but also filters
packaging and product itself to kill Micro-organism that were left during production processes.
Demand Forecast

Production Time for

completing the demand
forecasted

180 days earlier

60 days

Local (Made to Stock)

Push Strategy

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Export (Made to Order)

Pull Strategy

Shipment time after receiving

the order including ETO
process of 22 days

Reach the point of destination

after the shipment (By Sea)

45 days

70 90 days

National Foods Limited Products:

PRODUCT LINE

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SUB Categories
DESSERTS

Recipe masala
RECIPE

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RECIPE MASALA JARS

RICE

fruitly

JAMS

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FRUITILY

CHINESE

SNACKS

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BASIC RECIPE

SALT

CHUTNEY & SAUCES

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GINGER AND GARLIC PASTES

GOLDEN FRIED ONIONS

MASALA SNAX

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PICKLES

Logistical System or Tools

NFL used SAP integration for production and process planning but has manual warehouse
management system including shelving and picking.

3 PL

T r a n s p o r t a t io n

D is t r ib u t io n

O u tso u rce

W a re h o u se

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Supplier Selection Criteria

1.

Procurement Process

ISO Certified
B id T a b
(a tle a s t 3 )

2.

Meet QC Standards

3.

Environmental Friendly
Q u o ta tio n

4.

Sensitive Monitoring of new suppliers

(for first three months)
S a m p le
C heck

5.

Permit +/- 5% of standard sample size

6.

Permit +/- 2% of material procured

P u rc h a se
O rd e r

In order to ensure the supplier standards in lien with the

NFL criteria, QC perform 4 surprising visit to each supplier
M a te ria l
R e c e iv in g

T IR
( T e c h n ic a l
In s p e c tio n
R e p o rt)

In v o ic e

B illin g /
ROP /
C heque
Paym ent

Paym ent

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Pull

Supply Chain Model

Export
(MTO)

Local
(MTS)

INBOUND LOGISTICS

Push

Pull
Demand & Planning
Department

Push
Forecast

Procurement

Production Planning

Random
Material
Inspection

Material Acquisition

Pull

Sales &
Marketing

Material Resource
Planning

FInance

Suppliers

Bid Tab
Quotation
Selection Sample
Check Issuance of
PO Material
Receiving TIR
Invoice

ISO Certified
QC Standards
Environmental
Friendly
Delivery
Quality

Safety Stock
Labour OT

SAP

Processing of Raw
Material

Manufacturing
Department

Packaging &
Labeling

Warehouse
Management
System

Karachi

Local
Market

Export

Other parts of
Pakistan

Site Area (R&P)

Muridke
Gujranwalla
Port Qasim (FGS)

Raw Material
(Crop Batch)

Consumer /
Customer

Packaging
(Blanket PO)

GMS

3PL

Push
Retailer

Push

Wholesaler

Push

Distribution

Outsourcing

Transportation

OUTBOUND LOGISTICS

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Discussion on the phases of supply chain

Demand & Planning Department
The D&P will forecast the demand for each product line in collaboration with Sales & Marketing
and Finance department. The previous sales data will be extracted from the SAP which will
enable them to predict accordingly.

Production Planning
Once forecast has been received by the production department. They will go with the material
resource planning which includes production capacity, safety stock, calculation of workforce
overtime with the information generated via SAP.

Procurement
Material acquired by the procurement department from the suppliers looking at the Standard
Criteria and follows the procurement process. Suppliers are segmented in the context of local and
export products and bifurcated as Raw Material Suppliers, Packaging Suppliers and General
Material Suppliers. Random Sampling Check will be done after the required material received
and will be conveyed to the manufacturing division.

Manufacturing & Warehouse Management System

After the processing of Raw material it leads to packaging and labeling at Site Area, once
finished will be stored at the warehouse at Port Qasim (in case of Karachi) and finally conveyed
to the distributor. In case of warehouse located outside Karachi it will processed and directly
conveyed to the distributor for further dissemination in the market.

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References
http://nfoods.com/wp/wp-content/uploads/2015/09/annual-report-2014-15-national-foods.pdf
http://nfoods.com/
Mr. Abdus Salam (Manager, Supply Chain Export Division)

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