SUPPLY CHAIN STRUCTURE OF BERGER PAINTS PVT LTD

Name: S. M. ABBAS SHAH Reg #: 8080 Program: MBA (Evening) Course: Supply Chain Management Submitted to: Sir Adnan Shahzad Date: 25 October 2010

Main City Retailers

Provisional Retailers

District Projects Institute Industry

DISTRICT WAREHOUSES

CENTRAL WAREHOUSE KARACHI

MANUFACTURING PLANT, KARACHI

STORE

PROCRUTMENT

SUPPLIERS

IMPORTED SUPPLIERS 60%

LOCAL SUPPLIERS 40%

1) Industrial Products: are customized products for other businesses (B2B Clients) e.g. Honda(Car) Pakistan, Yamaha DY, Wapda etc. and are also included in the Forecast but their base material is customized. These include Ber-Coat, Oxi-Plast, Matt Finish , Stoven Paints. 2) Decorative Products: are those products which are used in homes

Flow of Orders:
Berger distributes it self to retailers throughout Pakistan by a mechanized Order flow structure Decoration: Warehouse- Order Place Purchase Document (PDP) (B.O.M) Lab/Reference Files Production Schedule. Industrial: Regional Office or Warehouse Technical Department Lab Reference Purchase Order (PO) Warehouse Store Production Schedule.

Regional Office or Warehouse

WarehouseOrder Place

Technical Department Purchase Document (PDP) (B.O.M)

Lab Reference Purchase Order (PO)

Warehouse Lab/Reference Files

Store

Production Schedule

Production Schedule

Procurement
Overview:
Total No. of Materials = 2500 different materials Average Imported Materials = 60% (i.e. 1500 materials) Most important and Expensive Material = Titanium Di-Oxide (TiO2) Purpose = Adds durability to the products. (only used by Berger and ICI)

Usage = 200 ton/month Economic Order Quantity (EOQ) = 600 tons Price = $2000/ton

MRP/MPS/ERP
Master production scheduling (MPS)
The objectives of this module are to help Berger Pakistan to anticipate shortage before its occur, (current stock, purchasing order, manufacturing order & sales order) these activities creates a projection of your stock levels anywhere from a week to several years in advance through this you can easily highlights your shortage in red and excess in green. Drill down in any item to analysis of stock activity, through MPS you can easily see what exactly the shortage will appear if we execute the specific production plan.

Material Requirement Planning

MRP serve as a bridge between the master production schedule and real purchase order and manufacturing order. MRP shows which item have to purchase, in what quantity, and when the order should be placed so that the required material will arrive just in time.

Procurement Process:
1) Forecasted Procurement: As sales are forecasted for the next upcoming three months and consistent changes are made for the deviations created in the market due to any factor.(e.g. if we are standing at November 2006 we will forecast for Febuary 2007) So, procurement planning is also made for the next three months as 60% of raw materials are imported and only 40% are locally acquired, so, the lead time is:

Materials

Imported Lead Time: 7090 days

Locally Procured Lead Time: 10 15 days

Resin one another important material which is used in bulk quantity availability of it is very unfrequented And profit margin is sometimes very high.

Therefore they manufacture themselves. 2) Bill Of Material (B.O.M.) 3) Querying Sources of Suppliers of Raw Material Sample of raw material is acquired from the suppliers and tested for quality assurance that it is up-to the mark. Defects are checked till the raw material is consumed and final product is made and usually no defects are found as Certificate of Analysis is made by the Procurement and the Laboratory (+ QCC) departments. 4) Price Negotiation 5) Performa Invoice is called 6) Purchase Order is placed

7) Establish Letter of Credit (L.C.) 8) Revival and Recovery of Original Documents: Bill of Lading Invoice Certificate of Analysis (Confirms no deviation in order) Letter of Credit

9) Clearing Agents 10) Delivery and Possession of Material 11) Good Receipt Note

Bergers Quality Policy

Manufacturing
Overview:
Maximum Capacity: 110,000 liters/day (1000 Kg per day.) Forecast: 3,300,000 liters/month Actual Capacity: 2,500,000/2,600,000 per Month

General Manufacturing Process: Types of Products:

Products

WaterBased Lead Time: 1.5 day

Solids e.g. Powder Paints Lead Time: 4 5 days

Batch Sizes:
(Actually done in Weights as Raw material is charged in weights but the output is in usually in the form of Liquid through Standardized Formulae) 200 litres smallest batch sizes then 400 litres and so on. If there is an order of 300 litres of industrial product (P/O) then the production department asks the clients to go for 200 litre or 400 litre or see other orders of same specifications to produce combine. Brief Manufacturing Processes: 1) Material Acquisition from Store: Store is controlled by the Procurement Department. Any material required by production Department is ready after max 24 hours. As this store issues raw material from the warehouse which orders raw material of 3 months ahead by the forecast created and approved by the sales department. E.g. if standing in November the forecast will be approved for Febuary and the Material Procurement process will come into action. Note: The daily deviations are also reported to all the departments as any new extra or out of ordinary orders are placed. 2) Charging: it is the phase of production in which the raw materials are inputted into machines as there are many types of raw materials and are in bulk quantities keeping in mind the exact standardized quantity of raw material to achieve consistent quality and performance of the product. 3) Grinding: Grinding the raw material of solid form and mixing of liquid raw material with it. After this process the output is in the form of paste and this similar to the base material. 4) Mixing: after grinding raw materials are mixed.

5) Finishing: Raw materials for the durability, bonding and glossiness of the paint are added. 6) Colour Matching: Colour is added and checked according to the specified standards and according to the ordered requirement. 7) Quality Check (Q.C): the quality of the product is checked in all terms and respects including colour, shine, bonding, base material, drying procedures, drying time etc. 8) Filing: The Orders for the filling packs or tins are given at the time when production Schedule is made, so by the time manufacturing is completed the empty packs and tins are ready and available from the supplier. Filing of Industrial Products of 2000 5000 liters takes one day. And filling of Decorative products of 2000 8000 liters a day. 9) Printing: Ink Jet printing is used to print each tin or packets. A single packet or tin takes 1 min for printing. 10) Storing: all the finished goods after packing and printing are stored in the warehouse which is situated within the premises of Berger Pakistan S.I.T.E.

Orders Colour Matching + Quality Control (2-3 days)

Container Div. (Tins) Tin Preparation Filling (1 day) Ink Jet Printing Grinding (5-6 hours) Quality Control Store (Finish Goods)

PDP (B.O.M.) Production Planning Store (Raw Material) Charging (1-2 hours)

Tanks (Large Batch)

Pots (Small Batch)

Bottlenecks:
1) Grinding 2) Colour Matching 3) Quality Control

LOGISTICS
Warehouse & Distribution
As paint is a product that is very sensitive to seasonal conditions that is why warehousing should be according to the specific needs that are required to store particular type of paint .As for plastic emulsion it can be stored at room temperature that should not exceed 27 degree centigrade on the other hand for stoving paint that is particularly for automotives air conditioning is also required. So Berger paints has state of the art warehouses that are completely RCC structured as well as some warehouses are equipped with air conditioners.

Manufacturing

Karachi Central Warehouse

Lahore Warehouse

Islamabad Warehouse

Multan Warehouse

Faislabad Warehouse

Gujranwala Warehouse

Others Warehouses Quetta Hyderabad Peshawar Rawalpindi

They have different warehouses in Pakistan and Karachi warehouse works as a central warehouse through which others warehouses Orders are catered, which is located right besides the manufacturing plant in Karachi.

Berger Pakistan has its own network of distribution they directly supplies to its retailers through their above 10 warehouses and from retailers it reaches to the final consumers.