SUPPLY CHAIN MANAGEMENT

REPORT ON
NATIONAL FOOD LIMITED

SUBMITTED TO: Ms: HINA A. RAHIM

SUBMITTED BY: MONA BAI [3695]
ASMA MEHMOOOD [3563]
 ACKNOWLEDGEMENT

We would like to express our sincere Gratitude and thanks to our

respectable teacher Mr. Hanif memon for extending this support and
cooperation in the whole semester and her guidance in the completion
of the report.

Without the Encouragement, Guidance and support of our Teacher the

completion of this report would not have been possible.
 Table of Contents

Page
S.No. Title
No.

1 Executive Summary
2 Introduction of NFL
3 Industry Profile
4 Founders’ Philosophy
5 Production Facilities
6 Mission Statement
7 Vision Statement
8 Core Values
9 Directors & Management
10 Organization Chart
11 Product Profile
12 Business Vertical
13 SCM / Procurement Mission Statement
14 Logistics Profile
15 Procurement & Production Control
16 Marketing department
17 Finance Department
18 Human Resource Department
19 Risk management
20
21 Total Cost of Ownership
Executive Summary

This report presents detailed information on the Supply Chain

Management at National Food Limited. The content provides an
introduction to the workings of the company and focuses on the
processes followed at the company. Products transacted suppliers,
procurement from overseas and local supplies, their qualification
criterion, inventory management and distribution network
management has also been discussed.

The process starts with sales forecasting which gives an estimate of

the sales on monthly basis. Imported material inventory of about 3
months is maintained as safety stock. Some indigents are procured
locally as well as packaging material of the product.

Raw material warehouse, they also have a SITE warehouse is the main
storage for imported finished products. The customers in south region
are supplied from these warehouses. The ware houses are not only
located in Karachi but also in Lahore Multan and Islamabad. NFL get
raw material by importing by china and Singapore as well as locally.
NFL maintains those materials till finished good inventory by keeping
safe in ware houses.

There are distributors in the local and international further supply to

retailers in their respective areas. Transport operations are managed
by the company itself with the help of outsourcing within agreement.

Complete operations are recorded and maintained by the supply chain

manager of the company which enhances effective and efficient
operations and provides a competitive edge.

The report concludes on the importance of Supply Chain Management

in the NFL and the wide ranging benefits of its efficient
implementation.
Introduction

National Foods was founded in 1970 and started out as a Spice

company. 3 decades later it has diversified into a versatile Food
Company with over 110 products and 165 and above SKUs (Stock
Keeping Unit) for the domestic market and over 100 different products
for the international markets.

The vision to see National Foods as a professionally managed Human

Resource company, set more then 7 years ago, was realized by
transforming a local company into a very dynamic and progressive
management structure in line with industry practices.

Competent Human Resources from within the company have fuelled

tremendous growth by excelling in Functional Management. Even after
3 decades the company's focal point still remains on Customer's
needs through Product development in line with the changing market
trends.

In this innovative age of ever changing lifestyles, fuelled by the

rampant development of technology; consumers have been compelled
to change their eating habits. National Foods responds to this
challenge of developing innovative food products based on
convenience and fast preparation in line with modern lifestyles and yet
retains traditional values through its impressive collection of food
products.

The brand delivers its ultimate promise by consistently delivering value

to its consumers. National Foods enriches family relationships by
bringing people together for family traditions, feasts, seasonal holidays
and of course - everyday life.

.Some information about National Foods’ offices in Karachi is as

follows:
Registered Office:

12/CL-6 Claremont Road

Civil Lines, P.O. Box 15509

Karachi 75530, PAKISTAN

Tel: +92.21.5662687

Fax: +92.21.5684870

Email: info@nfoods.com

Marketing Department:

219 T-Forum, G-20, Block –9

Clifton, near Agha Super Store

Tel: 92.21.5821243-46

Factory:

F-160, S.I.T.E.

Karachi, PAKISTAN

Tel: +92.21.2577707

Fax: +92.21.2572217

Email: info@nfoods.com
BOARD OF DIRECTORS

MR. A. MAJEED Chairman

MR. ABRAR HASAN Managing Director/Chief Executive

MR. WAQAR HASAN Director

MR. KHAWAR BUTT Director

MR. ZAHID MAJEED Director

MR. EBRAHIM QASSIM Director

MS. JAMILA WAQAR Director

MR. FIRASAT ALI Director (N.I.T. Nominee)

MR. HABIB A. ISMAIL Company Secretary

VISION AND MISSION OF THE COMPANY

To be a

Food Company by the year 2020.

“In the convenience food segment by launching products and services

in the domestic and international markets to enhance lifestyle and
create value for our customers through management excellence at all
levels.”

SUPPLY CHAIN MISSION

“To efficiently create relationship with suppliers, and distributors, so

that product is produced and distributed at the right quantities, to the
right locations, and at the right time, in order to minimize system wide
costs while satisfying customer.”

LOGISTICS MISSION

“Aim by moving the material needed by production into the company

and moving finished goods to the customer at right time with lowest
cost.”

PROCUREMENT MISSION

 Low production costs

 Fast and on-time deliveries
 High quality products and services
 Flexibility
 This was long before the
phrase’ corporate Mission’
had even been invented.
However, our philosophy
remains unchanged over
time.

FOUNDRS’ PHILOSOPHY

National foods must focus on customer’s needs and serve them with
quality products at affordable prices at their doorsteps.

Our products must be pure confirming to international standards.

Our research must produce continuously new adventurous products

scientifically tested, hygienically produced in safe and attractive
packages.

We must create an environment in our offices and factories where

talents are groomed and have opportunity to advance in their careers.

We must prove to be recognized as good corporate citizens support

good cause-charity and bear fair share of taxes.

Through building a reliable brand, National Food Limited must get itself
recognized as leader in Pakistan and abroad.

With the help of Almighty God company can achieve its targets in
years to come.

Statement expounded in 1972.

ORGANIZATION STRUCTURE OF NATIONAL FOOD LIMITED

C.E.O
NATIONAL FOOD LIMITED PRODUCT LINE
SBUs
Food! What we eat defines our personality, shapes our way of living
and chalks out our physical appearances.

National Foods is one such company, dedicated to improving lives

through providing healthy, innovative foods items that excel in quality
and provide value for money. With a range of over 110 products in 12
major categories, we are one of the largest food companies in the
business.

Food for all occasions … We provide you with all you will ever need,
whenever you need it and in whatever form you need it. We put you
first! Enjoy our product range
 Industry profile

National food Limited is leader in ketchup categories, with having more than
23% market share. Shezan has a market share of 17%, shangrilla has a
market share of 16% and Mitchell’s have a market share of 10%
Ketchup categories

Made from the finest tomatoes, National Ketchups and sauces cater to every
taste. From the hot and tangy to the sweet, National Foods offers a ketchup
for every dish and occasion. Use them as dips for your munchies, dressing
for your salads, accompaniments for the main course or even as marinades
for your recipes. National Foods sauces can do it all.

Products

A) Chilli Garlic Sauce B) Hot & Spicy Ketchup

C) Imli Chutney Sauce D) Meethi Ketchup
Tomato Ketchup
Description
Enjoy the tangy flavour of Pakistan’s best tomatoes in National’s Tomato
Ketchup.
Tamtamata maza for the whole family (1 kg. Family Pack)
Tamtamata maza in a sahoolat pack (100g. Sachet)
Serving Size
20 person ( 1 tablespoon per person).
Ingredients
Tomatoes, Sugar, Salt, Modified Food Starch, Blend of Spice Extracts,
Vinegar, Stabilizer (E415),Preservative (E202) & permitted food color (E129)

Nutritional Facts
Pack Size: 16 gm
Servings per container: 20, 50
Nutrition Facts
Total Calories: 20
Calories from Fat: 0
Total Fat: 0 g, % Daily Value: 0%
Saturated Fat: 0 g, % Daily Value: 0%
Cholesterol: 0 mg, % Daily Value: 0%
Sodium: 200 mg, % Daily Value: 8.0%
Total Carbohydrates: 4.5 g, % Daily
Value: 1.5%
Sugar: 3.5g
Protien: 0g
Vitamin A: 0%
Vitamin C: 0%
Calcium: 0%
Iron: 0%
Not a significant source of Saturated Fat, Protein, Cholest.,Calcium & Iron.
Percent Daily Values based on a 2,000 calories diet. Your daily values may
be higher or lower depending on your calories needs.

Available in:
Tomato Ketchup (300 gm.)
Tomato Ketchup (800 gm.)
Tomato Ketchup (3500 gm.)
Tomato Ketchup (1800)
Tomato Ketchup (1800 gm.)
Tomato Ketchup (1 kg. Family Pack)
Tomato Ketchup (100g. Sachet)
Tomato Ketchup (500g. Pack)
Ingredients

Hot & Spicy Ketchup

Description
For those who like their ketchup with a zing, National Hot and Spicy is the
perfect answer.

Serving Size
20 person (1 tablespoon per person).

Ingredients
Tomatoes, Sugar, Salt, Modified Food Starch, Red chilli, Vinegar, Stabilizer
(E415), Preservative (E202) & Permitted food color (E129), Blend of spice
extracts.

Nutritional Facts
Pack Size: 16 gm
Servings per container: 20, 50

Nutrition Facts

Total Calories: 20
Calories from Fat: 0
Total Fat: 0 g, % Daily Value: 0%
Saturated Fat: 0 g, % Daily Value: 0%
Cholesterol: 0 mg, % Daily Value: 0%
Sodium: 200 mg, % Daily Value: 8.0%
Total Carbohydrates: 4.5 g, % Daily Value: 1.5%
Sugar: 3.5g
Protien: 0g
Vitamin A: 0%
Vitamin C: 0%
Calcium: 0%
Iron: 0 %
Not a significant source of Saturated Fat, Protein, Cholest., Calcium & Iron.
Percent Daily Values based on a 2,000 calories diet. Your daily values may
be higher or lower depending on your calories needs.

Available in:
Hot & Spicy Ketchup (11 gm.)
Hot & Spicy Ketchup (300 gm.)
Hot & Spicy Ketchup (800 gm.)
CHILLI Garlic Sauce
Description
This hot and tangy sauce is the perfect accompaniment for snacks as well as
the main course.
Serving Size
20 person ( 1 tablespoon per person).
Ingredients
Tomatoes, Sugar, Salt, Modified Food Starch, Garlic, Red Chilli, Blend of
Spice Extracts, Vinegar,stabilizer(E415),preservative (E202) & permitted
food color (E129).
Nutritional Facts
Pack Size: 16 gm
Servings per container: 20, 50
Nutrition Facts
Total Calories: 20
Calories from Fat: 0
Total Fat: 0 g, % Daily Value: 0 %
Saturated Fat: 0 g, % Daily Value: 0 %
Cholesterol: 0 mg, % Daily Value: 0 %
Sodium: 200 mg, % Daily Value: 8.0 %
Total Carbohydrates: 4.5 g, % Daily Value: 1.5%
Sugar: 3.5g
Protien: 0g
Vitamin A: 0%
Vitamin C: 0%
Calcium: 0%
Iron: 0%
Not a significant source of Saturated Fat, Protein, Cholestrol,Calcium & Iron.
Percent Daily Values based on a 2,000 calories diet. Your daily values may
be higher or lower depending on your calories needs.
Available in:
Chilli Garlic Sauce (300 gm.)
Chilli Garlic Sauce (800 gm.)
Imli Chutney Sauce

Directions
Home made tamarind dips are a mainstay of every Pakistani meal. Now
National has bottled this flavour for everyone around the world.

Ingredients
Fresh Tamarind (Imli), Sugar, Salt,Ginger, Spices, Acetic Acid (E260), Citric
Acid (E330), Stabilizer (E415) & permitted food color (155).

Nutritional Facts
Pack Size: 16 gm
Servings per container: 20

Nutrition Facts

Total Calories: 8
Calories from Fat: 0
Total Fat: 0 g, % Daily Value: 0%
Saturated Fat: 0 g, % Daily Value: 0%
Cholesterol: 0 mg, % Daily Value: 0%
Sodium: 40 mg, % Daily Value: 1.66%
Total Carbohydrates: 2.0 g, % Daily Value: 0.7%
Sugar: 1.6g
Protien: 0g
Vitamin A: 0%
Vitamin C: 0%
Calcium: 0 %
Iron: 0%
Not a significant source of Saturated Fat, Protein, Cholest.,Vit. C, Vit. A,
Calcium & Iron.
Percent Daily Values based on a 2,000 calories diet calories diet. Your daily
values may be higher or lower depending on your calories needs

Available in:

Imli Chutney Sauce (325)

Meethi Ketchup

Directions
The ketchup with a sweeter taste, National Meethi Ketchup is immensely
popular with kids.

Description
Pack Size: 16 gm
Servings per container: 20
Total Calories: 20
Calories from Fat: 0
Total Fat: 0 g, % Daily Value: 0%
Saturated Fat: 0 g, % Daily Value: 0%
Cholesterol: 0 mg, % Daily Value: 0%
Sodium: 200 mg, Daily Value: 8.0%
Total Carbohydrates: 4.5 g, % Daily Value: 1.5%.
Sugar: 3.5 g
Protien: 0 g
Vitamin A: 0 %
Vitamin C: 0 %
Calcium: 0 %
Iron: 0 %
Percent Daily Values based on a 2,000 calories diet. Your daily values may
be higher or lower depending on your calory needs.

Serving Size
20 persons ( 1 tablespoon per person).

Ingredients
Tomatoes, Sugar, Salt, Modified Food Starch, Blend of Spice Extracts,
Vinegar, Stabilizer (E415), Preservative (E202) & Permitted Food Color
(E129)

Available in:
Meethi Ketchup (300 gm.)
 NATIONAL FOOD KETCHUP’S VALUE DELIVERY
NETWORK

Customers

Retailer

Multan

Lahore Distributors Karachi?

Islamabad

Multan Ware houses

Karachi.
Lahore

Islamabad Storing after production

Customer

Manufacturing

Storage room for paste Storage room for paste

within factory within factory

SSUPPLIER [CHINA] SUPPLIER [LOCAL] SUPPLIER [LOCAL] SUPPLIER [LOCAL]

Tomato Paste Salt Chilli Labels

SUPPLIER
SUPPLIER [LOCAL] SUPPLIER [preservative SUPPLIER [LOCAL]
[LOCAL]
Bottles cap Bottles chemical] Garlic, imli, sugar
 NATIONAL FOOD LIMITED SUPPLY CHAIN AND LOGISTICS FLOW
CHART

STOCK ORDERS RECEIVE

RECEIVED FINISHED ORDER FROM CUSTOMERS
FROM GOODS PROCES AS PER
PRODUCTION STORE AGREEMENT

CAPABILITY
CHECK

ORDERS FEED YES NO INFORM

INTO SYSTEM CUSTOMER

DISPATCH LOGISTICS
LIST/D.C

DIRECT DELIVERY STOCK TRNSFER

OR DISPATCH TO TO DIFFERENT
CUSTOMER WARE HOUSES

DELIVERY OR
DISPATCH TO
CUTOMER

RECEIVE
TR/CHALLENGE
[LOGISTICS/WH

FINANCE ISSUES SEND TO

INVOICES CUSTOMER
RAW MATERIAL CLASSIFICATION

1. Imported Raw Material [tomato paste]: In which they import

raw material from China directly in bulk quantity .the lead time is 60
days.
2. Imported Food preservatives chemical from Singapore.
Food preservatives and chemical for ketchup is imported from
Singapore lead time is 45 days

3. Garam masala is imported from India via Dubai lead time is 30 days
4. Locally Raw Material Procured [salt, chili, bottles & caps,
plastic containers and labels]: these all materials National Food
Limited locally procure bottles from Balochistan from Hataar.

5. Garlic, imli and sugar are purchased locally. last year sugar was
imported from Dubai at price of 27 per kg . when price of sugar locally
was very high.

Material storage:
Material like tomato paste, NFL just store within factory having
separate store for the temperature purpose NFL keep cold at 5
centigrade and its shelf life is 1 year.
Other local material like chili, salt, bottles they just keep in one store
room because NFL said that there is not such a need to keep at cold
storage or to maintain any temperature.
Demand of ketchup

Bull Whip Effect:

Usually demand increase in Ramadan or seasonal wise. Otherwise NFL
has a normal process in sense of orders. While asking about bull whip
effect NFL said In case any fluctuations occur then the stocks are
adjusted according to the demand and then manufactured to finished
goods. NFL does not face any difficulty while producing more than
normal because NFL manufactures ketchups with under utilization
capacity.

DEPARTMENT WISE PROCESS OF NATIONAL FOODS

There are seven major departments in National Foods:

• Human Resource Management

• Procurement/supply chain management
• Store Department and Production Department
• Finance
• Research and development
• Marketing
HUMAN RESOURCE DEPARTMENT

HR activities involve:

 Personal activities of employees & workers

 Hiring [hiring of employees on the bases of skills like
supervisors are permanent and skilled employees. Un-skilled and
semi skilled are on the temporary bases NFL hire them.
 Training and development [(sales development) as national
food giving training to the farmers who supplies chili, because of
avoiding dust].
 Skill development program [The adult literacy program
carried out by National Foods’ Pakistan is unique in the sense
that this is the only company in Pakistan that is working for it
illiterate workers. The idea of this program carries is to provide
basic education to each and every employee of the company.
 Annual evaluation system (Through policy documentation
service manuals)
MARKETING DEPARTMENT

The marketing department serves as a backbone in the corporation

and hence the role of it is supposed to be the most important. The
market department in any organization is responsible for the
marketing of the company’s product and to make efforts to build
company’s image in the market or with the customers.

The National foods Pakistan has maintained a separate marketing

department that is responsible for marketing the various products
produce by the company. The activities of marketing department start
with the need identification of customers in the market. They along
with the help of finance department personals develop forecasted sales
of the products offered by the company, the forecasted figures are
than handed over to the procurement department for the purchase of
raw materials.

The company is involved in the indirect sales activities; there is always

a middle-man involved in the company and retailers.
Supply Chain Management

PROCUREMENT DEPARTMENT

The purpose of procurement department is to arrange the purchases

for the respective departments. Procurement is somewhat different
from purchasing department. Purchasing is solely related to the
purchasing of the different products but it would not link to the other
departments. In the process of the procurement the department
searches the product best suitable and gives it to the department
needing the product.

The procurement department of National Foods is quite good and well

maintained. It included 4 key personals involved. Although there are
many a people involved in procurement but these 4 are main. The
procurement department follows a special pattern or process for the
procurement of the products. Sometimes procurement is done on the
routine basis and sometimes or the others it is on daily or sudden on
time basis. For the routine basis large items procurement is made on
the following patterns:

1. FORECAST

Each and every department is liable to tell the procurement

department according to their estimate. Different departments make
forecast on annual basis and give the request to the procurement
department. Then these forecasts are kept in records and cumulate
with all other department forecasts.

2. PLANNING PURCHASING REQUEST

After all the forecasts have been cumulated, a purchase requisition has
been prepared. This requisition is the cumulative of all the products.

3. PROCUREMENT DEPARTMENT

When all these things have been completed, the procurement

department comes in scene and search for the available product
ranges with specification. At times for larger orders, it also asks for
bids. The procurement department then analysis all the bids. NFL
negotiates with competitive rates of three or four suppliers of the
specific products, where they got lower cost with good quality.

3. PURCHASE ORDER

After the final analysis the purchase order has been made to the name
of the supplier or bidder. And then the product or the material has
finally been acquired.

As National Foods is concerned mostly with the agricultural products

because all the products made use crops as raw material. Mostly the
raw material is seasonal. At times some crops grow and some would
not. So it is the liability of the procurement department to maintain
the stream of the raw material. So for seasonal products, National food
purchased 30 lack tons of mangoes and 1800 lacks tons of carrot it
acquired raw material early and makes it safe with frozen
refrigerators. An example would be the case of tomato paste, which is
mostly imported from abroad [China]. The procurement department
usually purchases stocks and it is also evident that before purchasing
the quality has been checked according to the specific measures set
before.

The company is very strict towards the supplier side. This is because of
the regular check on the quality and maintains the standards of ISO
9002. For the fulfillment of this specific purpose, company is
maintaining an evaluation form to check the supplier. The purpose of
the evaluation is:

AS TO CHECK THE SUPPLIER

The supplier fills it and the supplier has to write down the names of
those companies to which it is presently supplying. If the supplier is
supplying the raw material to well renowned credibility that it is a good
one.

CERTIFICATION OF QUALITY

As National Foods main emphasis is on quality that is why it is highly

concentrating on the factor that its supplier should be ISO certified.
Because if the raw material would not be of the premium quality, the
product cannot be as good, to obtain the standards of quality.

ENVIRONMENT AND ATMOSPHERE

The supplier‘s business environment is also checked by National Foods.
Whether the supplier is in political habit or not. If this would be the
case supplier will be rejected, as it cannot fulfill the raw material
request any time or the flow of raw material cannot be steady.

SOUNDNESS OF THE PARTY

The supplier should be sound means that it should have a good

credibility and ability to meet large raw material requirements. If the
supplier is not good enough to give credit or it cannot handle large
contracts due to the unavailability of working capital, it will again be a
hassle for the company that is the reason that soundness is necessary.

“EVALUATION FORM”

For the smooth running of the procurement department, firstly

everything to be purchased is budgeted. Every department makes it
own budget to set the completion of its requirement. These
requirements are then sent to the procurement department. The
procurement department then makes connect with the finance
department for the approval of the necessary amount required. The
finance department approves the required amount and the
procurement takes place.
STORE DEPARTMENT & PRODUCTION DEPARTMENT

The purpose of the store department is to maintain the stores of the

company’s raw material. On receiving the purchase order the store
department prepared the necessary space and atmospheric conditions
and safety request for the material. On the receiving of the material
the store department makes a MRR (Material Receiving Report).
These bills and report are then given to the production department for
the issue of material for production. Store department issues the
necessary material to the procurement department and the production
department processes the material for the finished goods. In the mean
time the store department reduces the inventory for the raw material
to wip account. When the production department finished the process,
the finished goods moved to the store department and the store
department added the inventory as finished goods produced. When
this finished goods moved out of the store, a delivery chalan has been
made and invoice for the transportation issued. Then finally the
finished goods produced were gone to the distributors for selling
purposes.
OPERATIONS

The duty of the finance department is to get the stream of

depreciation on each and every thing. Normally the depreciation
charged on the plant and machinery is 10% of the book value and on
the motor vehicle it is 20%.

As far as tax is concerned the company has to bear taxes on its

distributors and the products. As far as distributors are concerned the
company has registered and non-registered distributors. For its
registered distributors the company has to pay 15% duty and for non-
registered distributors the amount of the duty is 16.5%. Moreover the
burden of tax never ends up here. It has to give taxes on all the
material imported from abroad. The tax is known as import tax.

The stream of taxes is also depending upon from product to product

basis. Such as the application of the sales tax is highly dependent on
the product. Pickle has some other tax basis and the ketchup and
sauces have others.
Ware house

National Foods have decentralized system, there are four ware houses:

1. Karachi
2. Lahore
3. Multan
4. Islamabad

Inventory system in ware houses, normally NFL use FIFO system for
regular materials and LIFO system for seasonal material e.g. mangoes,
carrot and chili to maintain standard.

NFL uses bin card system to identify material for requisitions.

Lead time of paste from chine takes 45-60 days.

NFL takes 3 months inventory of paste and 1 month of packing

material.
LOGISTICS
INBOUND LOGISTICS
 Outbound logistic and Warehousing

Customers

Retailer

Multan

Lahore Karachi?
Distributors
Islamabad

Receiving and
Inspection

Finished goods
Warehouse
End of page
Total Cost of Ownership

The total cost of ownership consists of three parts:

1. Pre transaction components:

• To identify need of the raw material
• Formation of Milk Collection Centers
• Induction of farmers / supplier in company’s internal network
• Training of farmer / suppliers for milk quality & handling.

2. Transaction Components
• Pricing
• Order placement / Production
• Quality Control / Inspection
• Delivery and distribution to the retailers
• Invoicing
• Payments to the suppliers

3. Post-transactional components:
• Shipment Delays
• Satisfaction of the customers, company’s staff and all
stakeholders
• After sale service cost.
Future goals and objective of national foods:

Reduction of finished goods inventory from 21 days to 25 days.

Measuring tools:

• “To review stocks tools positions on last day of each month and
finally at the end of the year”.

• “To review daily +sales shortage reports and to compile on

monthly and than end of the year”.

• Target day to achieve these all objectives is 6-30-2007.