TERM REPORT OPERATIONS AND PRODUCTION MANAGEMENT MAHMOOD GROUP OF INDUSTRIES: MAHMOOD COTTON MILLS

Letter of Transmittal 26th May 25, 2011 Mr. Teacher: Operation and production management Dear Sir, We are pleased to submit this report on Mahmood Cotton Mills, part of Mahmood Group of Industries. This report is submitted as a term report for the 6th semester of BBA. Our main focus in this report is the cotton mill processing functions. The management of processing of the fiber cotton yarn is the main focus of this report. However keeping in mind the details of our course of operation and production management the report has many other operations aspects of the cotton mill under focus like capacity utilization, quality and such related.
Yours Sincerely,

Abstract:
This report is about Mahmood Group of Industry. Our main focus in this report is their Cotton processing mills. The main focus is to get an insight into how the organization manages the operation and the production of the cotton Yarns and the Spinning process. The basics till the end users in the supply chain are under study in this report. The report lightly covers the costs, quality, capacity and forecasting as well with respect to operations and production management. However the main focus is on the processing due to limitations of making this report.

Introduction To Mahmood Group Of Industries

The Group is in cotton business for the last 50 years. The projects include five Spinning Units, Two Weaving Units, Captive Power Project, and Number of cotton Ginning Factories composite with Oil Mills, Leather Tanning Unit, a company for trading operations, Agricultural & Fruit Farms. The total turnover of Mahmood Group is around Rs.4 Billion (US$: 70 Million). Domestic sales of 3.5 Billion Rupees a little portion into export Figure 1. The Group owns and operates seven companies located in various parts of the country, comprising of twelve modern production units. The group is currently employing 3500 personnel in its different projects. The Group has been awarded seven Merit Trophies for best domestic production performance during different years by Prime Minister of Pakistan & other High-ups through Federation of Pakistan Chamber of Commerce & Industry an Apex body of Trade &Textile Industry. In addition, Corporate Excellence Certificate 1998 has been awarded to them in Textile & allied Sector by the Management of Association of Pakistan (MAP). As per data collected by Vital Information Services (Pvt.) Ltd., the name of this Company was ranked as one the fastest growing Companies of Pakistan. To build more confidence in their products by their valued buyers Certificates under ISO 9002 have been achieved separately for our five Spinning and two Weaving unit from (URS) (United Registrar of System Ltd.) U.K.

Figure 1.

Introduction of the Cotton Mills of the Company: Mahmood Group is vertically based on integrated industries and started business in 1935, by setting up a tanning unit. Since then, the group has grown immensely in the fields of cotton ginning, spinning and weaving. Objectives: 'Farm to Fabric' is the objective of the company. Being vertically integrated, the group possesses its own vast cotton farms in the area of Multan, a region of Punjab. The cotton ginning, seed oil extraction, spinning and weaving units are located at strategic places for efficient and harmonious working of the various production units. Current Performance: The only group which starts from cotton farming to ginning, spinning and weaving, which gives it a distinction over the entire textile industry of Pakistan. Certified by ISO, Supima, Lycra and Oko-tex. Employees = 11,000. Turnover = US$ 70 million. Exports ratio = 90%.

 Employee Turnover = 10%. Responsible Corporate Citizenship Core Values: The group is always open for strategic alliances & long term relationships (Core Concept and basic idea). We believe in passing on the benefit of less cost to our buyers instead of increasing our own overheads; however there is no compromise on quality or machinery Future Plans: In an era of trade globalization, our vision is excellence in terms of quality with satisfied internal and external valued customers. The objective is to achieve continuous improvement in quality through professional management, state-of-the-art equipment, and highly motivated workforce. We at Mahmood Group are demonstrating sustained growth over the period of last 3 decades with reasonably good return on investment which have been utilized to give high quality products to our valued customers at least possible prices. Vision Statement To be recognized internationally and locally as dynamic, quality conscious and ever progressive Textile Product manufacturer in the textile Industry of Pakistan. Mission Statement Mahmood Group is committed to: Be ethical in its practices. Excel through continuous improvement by adopting most modernized technology in production. Operate through professional Team work. Retain our position as leading and innovative in the Textile Industry. Achieve Excellence in the quality of our product. Be a part of countrys economic development and social Prosperity Operations Strategy Goals: The main purpose again is to have customer satisfaction. This would ultimately mean higher profits as more competition.

Core Competencies: The core competencies of Mehmood Textile Mills are as follows: Quality Standard Buyer Satisfaction Efficient and Effective Staff Competitive Priorities The importance of Competitive priorities is essential in every successful organization. The basic factor to be viewed is to look for is that which one is given the most preference and why. The four main core competencies are 1) Cost 2) Quality 3) Time 4) Flexibility Cost As far as cost is concerned this group is vertically based so overall cost is less then any other textile unit in Pakistan. Below is the cost factor percentages for the spinning mill processing

Quality: Two main things persist in this scenario of quality: 1) Consistent Quality 2) High Quality Quality is the thing, which is given most preference in Mahmood. The objective is to always have the best and most modernized machinery to have the best quality. The concept of consistent quality is simply not preferred as the company always wants to have increasingly better quality which gives them a big edge on there competitors. In a sense the quality can be consistent as it is for a specific customer a specific and consistent quality is to be maintained.

The quality policy of the group states as follows: "We are committed to the achievement of excellence in the quality of our products. This is done by motivating all employees towards the satisfaction of our customers and with the use of best quality raw materials." Flow Strategy: There are three possible flow strategies, which an organization can adopt. (1) Flexible flow strategy: (2) Line flow strategy: (3) Intermediate flow strategy: Flow Strategy Used In Mahmood Textile: The flow strategy used in most of the textile mills and Mahmood textile is Intermediate Flow. This is because there are some times some alterations and specifications made in the order. Which means no standard product. This basically depends upon the requirement of the buyer. The buyer gives up a specification and production has to be done accordingly. But this flexibility is only to a limited extent according to the capability of the machinery. Strategies Based On Flows: There are 3 strategies based on three flow-strategies. 1. Make-To-Stock Strategy:

Its for line flow strategy & high volume production. 2. Assemble To Order Strategy: Its for intermediate flow strategy. The components exist in organization but they are assembled on order. 3. Make To Order Strategy: Its for flexible flow strategy and customized product or services. Strategy Used In Mehmood Textile: The company being a textile like most of the other goes for the make-to-order as the production is made right according to the yarn.

Processing at the Mahmood Cotton Mills

The processincludes Fiber selecting process parameter and The spinning mill process. FIBER PROCESSING PARAMETERS Fiber processing parameters should be chosen to protect the fiber from breakage and overworking. This ensures that the finisher sliver is uniform and consists of highly parallel fibers and a low short fiber content.
Opening and Cleaning

The opening action must be as gentle as possible to avoid excessive breakage of fibers. The raw cotton stock should be opened into the smallest possible tufts to ensure thorough blending action and good cleaning efficiency. Do not exceed manufacturers recommendations for throughput and maintain an 85-90% material run time on all machines in the blow room.
Carding

Carding is the most important phase in the entire production process. Settings, wire condition, waste removal, and nep extraction dictate the resultant spinning performance and yarn quality. Visible foreign matter and nep content should be monitored for each card in the mill not just as a room average.

Drawing Previous drawing trials indicate that three processes of drawing tend to attain maximum fiber alignment and provide for the best yarn quality for carded cotton. Only one process of drawing after combing is recommended for combed yarns. The sliver weight is determined by the yarn count being spun.
Combing

Combing the carded cotton allows for finer yarn counts to be spun. Reduction of SFC% reduces waste at spinning, improves yarn tensile and evenness characteristics, and enhances fabric appearance and drape. Spinning performance may also improve with combed fiber.
MEHMOOD GROUP SPINNING

Like any other spinning system, the MG (Mahmood Group) performs best with properly prepared fiber. The cotton fibers should be parallel and free of extraneous matter. The MG Model 851 machine can reach speeds of up to 400 meters/minute. New piecing and clearer technology and tension control may allow future models to exceed production rates of 450-500 meters/minute (see Figure 2).

Cotton Incorporated conducted extensive research on the MG Model 851 spinning frame installed in the Fiber Processing Laboratory in Cary, NC. Controlled comparison studies (Mehmood Group Spinning Comparison Report Number 1999-1) were conducted in the late 1990s, which clearly show the quality relationships among MG, ring, and rotor-spun yarns and the resultant knit and woven fabrics. MG yarn strength improved as yarn count became finer (see general strength trend in Chart I). Chart I: Tenacity of MG Yarn In Relation to Yarn Count Strength Trend (gram/Tex) vs. Yarn Count (Ne)

The overall yarn evenness is equal to ring and rotor yarns. Total imperfections (thin places, thick places, and neps) are generally lower than ring and rotor yarns, especially for finer yarn counts. The knit fabrics made from MG yarns had better overall surface definition, especially compared to ring yarns. The MG knit fabrics exhibited better surface appearance after repeated launderings. There was slightly less torque or skew with the MG fabrics compared to ring-spun fabrics.
Soft Hand MG Technology

Historically, fabrics made from air jet yarns have a harsher hand when compared to ring and rotor spinning systems. Recent developments at Cotton Incorporated led to breakthrough results with respect to this important aspect. Through proper raw material selection, component selection, and machinery settings, soft MG yarns are attainable and well suited for knit end uses. Soft hand developments performed at Cotton Incorporated, comparing ring and MG spun fabrics made from the same cotton laydown, showed indistinguishable differences with respect to resultant fabric softness. In addition, the appearance and pilling/abrasion resistance is as good as if not better than the MG fabrics, especially after multiple home launderings and tumble dryings.
Core Spinning Technology

The MG spinning frame has core-spinning capability. This is a process in which a filament or staple yarn is fed behind the front roll of the drafting system and covered (or wrapped) with another fiber during the spinning process. Figure 3 shows the composition of a core spun yarn. Figure 3. Core Spun MG Yarn

MG technology is ideal for this type of end use, mainly because of the wrapping effect imparted at the spindle. The fibers are literally wrapped around the self-centering core component. A key advantage of MG core spun technology compared to ring core-spun technology is that the core is not twisted during spinning. As a result, fabric torque is reduced in MG core spun fabrics.

Novelty Yarns

Splash yarn is a novelty yarn, which can be easily made by supplying colored yarns to each part of a draft. Thanks to the unique formation method, colored yarn is scattered through the yarn, giving the spinner the possibility of creating value-added yarns. The combinations and types have infinite potential. Managing the Process of Spinning Mills Blow Room: This is the first department of a spinning Mills. The main object of Blow Room is to blow out the waste from the cotton which is blown through the machinery by suction blowing and beating method. The waste is extracted by gravitational force method. Usually 57% waste is extracted in this stage. Card: This is the second department in the line of spinning period. The cotton is once again cleaned short fibers and waste is extracted and the strand of fibers is brought in such a position that further drafting can be done in the subsequent processes. The waste extracted is almost 56% Drawing: The product from carding comes to drawing section. Here the product is mixed so that variation in quality may be minimized and the fibers are parallelized. Simplex: From drawings the sliver comes to simplex machine. In simplex the fibers are once again drafted and little bit twist is inserted. So that for final spinning the strand of fibers may get ready. Spinning:

In this process the yarn is manufactured from roving by drafting and twist insertion. There are different methods for spinning of yarn but ring running is most common method used in the world. Auto cone: The yarn made in ring spinning is brought to auto cone. In auto cone yarn is cleared from defects by any yarn clearer and with fix length is converted into a package according to the requirement of buyers. Packing: To give the yarn extra strength and elasticity the yarn is conditioned by giving some moisture and packed; now the yarn is ready for dispatch. Location The Group has four of its units located in the District area of Muzaffargarh while the other remaining one named as Masood Fabrics is located at KabirWala district. These locations are on the following basis. Availability Of Raw Material: One of the major factors for their location in Muzaffargarh is that its connecting cities like Multan and Bahawalpur are cotton growing areas and availability of raw material is not a problem at that particular area. Even though the company usually uses up its own ginning factories cotton but still periods can be there when the cotton from the market needs to be purchased. Proximity to Market: The firm can easily serve the other markets, as facilities were available. Mainly the production of the Raw Materials is there. This location of Shah Sons is also near by Multan which helps the mill in getting its spare parts. Taxes and Real Estate Costs: The real estate's cost at that time when the mill was established was too much lower as compared to the main area in the city which helped the group in developing the city and the its mill. Favorable Labor Climate: The labor plays an important role in the selection of the labor-intensive company. So the main reason for the selection of the site outside city was that the labor was available at the cheaper rate. Room For Expansion:

Another factor was that there was a potential to grow more in the market. This is why the mill in here added more four units.

Forecasting
Forecasting is the science and art of predicting future events. It may involve taking historical data and projecting them into the future with some sort of mathematical model or forecasting may involve combination of these i.e. a mathematical model adjusted by managers good judgment. Effective planning depends on a forecast of demand of the company products. Importance Of Forecasting: Forecasting help in adjusting three main functions: Human Resource Capacity Supply Chain Management Forecasting Approach: Generally two approaches are used for forecasting activities. These approaches are: Qualitative Approach: This approach incorporates some important factors like decision maker intuition emotion, experience and judgement. This approach include following techniques: Jury of executive opinion Sales force opinion Delphi Technique Consumer market surveys

Capacity
Capacity is the maximum rate of output for a facility. The facility can be a workstation or entire organization. Plants:

There are five spinning units in the group with all of them having almost the same capacity to produce. Four units are located in the Muzaffargarh district and the other one named as MasoodSpininig is located in KabirWala. Spindles in each plant: Unit 1 15360 spindles Unit 2 19600 spindles Unit 3 15360 spindles Unit 4 15360 spindles This gives an average of about 16420 spindles per unit. Capacity Information For A Unit: 1 Day= 24 hrs (3 Shifts of 8 hrs. each) Ideal Capacity =360,000 lbs. Peak Capacity =410,000 lbs Effective Capacity =300,000 lbs NOTE: Count Variations can have effect on the capacity. Capacity Cushions: The company basically produces according to its capacity. Capacity cushion dont not allow first class finished product. Therefore the company avoids keeping them. Enhancement In Capacity: There is no particular procedure for enhancement of capacity but mainly the help of following steps does it A-grade raw material is used so that less waste may be extracted in the manufacturing process and more production can be obtained. Wastage of material at different manufacturing stages is controlled and whatever is re-useable is reused.

Supply Chain Management

Supply-chain management aims at synchronization of a firms activities/ functions and those of its suppliers to match the flow of materials, service and information with customer demand. Supply Chain In Mehmood Textile:

Inventory Management
Inventory is stock of anything held to meet the future demand for organization. For an organization Inventory Management is very important process. Inventory Tracking: Different methods are used for the tracking of Inventory. Different computer programs and monitoring charts are used for keeping the Inventory minimum and maximum levels. Employees in the store have charts after Inventory level and report to management if Inventory level reaches to minimum level so that new order is made. Economic Order Quantity (EOQ) is also used to some extent as it is a general entity used by every organization. Average method is used by the Mill because according to them its is the most suitable for the organization and is determined in the policy of the organization.

Systems For Inventory Management: These are three types of systems. 1. Continuous system 2. Periodic 3. Hybrid system System Used In Mahmood: The company makes use of Continuous or perpetual inventory management system where the records of the finished goods and other inventory are kept up right upto date with the help of stores and other people assigned for this particular task as for the company this helps in having the work done in a more efficient manner. Reorder point: The company uses the optimal replenish system to an extent. For different items different minimum inventory level serving as the reorder point. But if calculated on average basis by the company I was informed that it has about 2 weeks are used as a reorder point. Aggregate Planning A manufacturing firms aggregate plan, called a Production Plan, generally focuses on production rates and inventory holdings, whereas a service firms aggregate plan, called staffing plan, centers on staffing and other labor related factors. The Purposes Of Aggregate Plans: Aggregation: The aggregate plan is useful because it focuses on general course of action, consistent with the companys strategic goals and objectives, without getting bogged down in details Aggregate Planning Policies: Reactive Policy: It means one has to follow the demand patterns by adjusting all three factors Production Rate Work-force labor Inventory level

Under reactive policy there are further two categories; Chase Policy: Demand is followed by adjusting production rates. No inventory is kept which avoids holding costs. Level Policy: Demand is followed through inventory level while keeping production rate constant. When demand is high it is met from inventory. When demand is low it results in piling of inventory.

Strategy Used In Mehmood Textile:

The company basically makes use of the level strategy where about 350 workers work in a particular unit. Further fluctuation of demand is not very much there therefore this is the most feasible strategy for the company. The company makes use of Undertime Overtime And according to the company most of the times there is no under time and if it is its almost negligible. Overtime payment is made according to the normal wage rate. Material Requirement Planning

Material requirement planning system enables businesses to reduce inventory levels, to utilize labour and facilities in a better way and improved customer-service. It mainly has three components 1. Bill of Material (BOM) 2. Inventory Records 3. Master Production Schedule (MPS) As the companys only finished good is yarn therefore the bill of material is pretty simple as well. The inventory of Raw Material i.e. cotton is on seasonal basis all the available and required cotton is stored in that duration. The master production schedule is prepared on almost weekly basis but is checked and reviewed on almost daily basis by the concerned authorities.

Conclusion
Mahmood Group of Industries is a big name in Pakistan, their cotton mills are also set up on a fairly large scale which makes the management of its operations a fairly difficult task. However as seen in the report state of art technology is being adapted in the production process. Mahmood cotton mills have been passing on the benefit of less cost to our buyers instead of increasing our own overheads; however there is no compromise on quality or machinery for cotton yarn processing. With Peak capacity of 410,000 lbs and effective capacity of 300,000 lbs the A-grade raw material being used causes less waste during extraction in the manufacturing process and more production is being obtained. Wastage of material at different manufacturing stages is controlled by effective management practices. The items which are re-useable are also put to reuse which is another edge and proof of effective operation management. The company is demonstrating sustained growth over the period of last 3 decades with reasonably good return on investment which have been utilized to give high quality products to customers at least possible prices. Being vertically integrated, the cotton ginning, seed oil extraction, spinning and weaving units are located at strategic places which proved efficient and harmonious working of the various production units which has helped the company in being recognized internationally and locally as dynamic, quality conscious and ever progressive Textile Product manufacturer in the textile Industry of Pakistan. References: Miss ParveenAbida, 2004, Production Accounting & Management System, Inspection System, Introduction, Report on Colony Textile Mills Ltd. Lahore Miss JavedIffat, 2006, Analysis Report on Mahmood Textile Mills Ltd. Faisalabad. Faisalabad Mr. BhattiJamil Muhammad, 2006, Cotton Production Report on Mahmood Group of Industry.