COURSE:

Strategic Sourcing and

Negotiation Skills

Submitted To:
Mr. Irfan Sheikh

Submitted By:

B.P. INDUSTRIES

Syed Mohsin Hussain - 01115

Emad Ul Haque - 10578
Sumaya Ali Channa - 10561
Shoaib Wahab - 10608
M. Tanweer Uddin - 09999
Choudry Fahad Azim - 05103

Table of Content
BP Industries: Overview ................................................................................................................. 2
Mission Statement ....................................................................................................................... 2
Companys background............................................................................................................... 2
Organizational structure of the company ........................................................................................ 3
Companys Organogram ............................................................................................................. 3
B.P Product Lines ........................................................................................................................... 4
The Purchase Department at B.P Industries Pvt Ltd....................................................................... 6
Procedure for Capital Expenditure at B.P ....................................................................................... 7
SWOT Analysis .............................................................................................................................. 9
Strengths ...................................................................................................................................... 9
Weakness ..................................................................................................................................... 9
Opportunities ............................................................................................................................... 9
Threats ......................................................................................................................................... 9
Recommendations: ........................................................................................................................ 10

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BP Industries: Overview
Mission Statement
Manufacture, export and provide the local market with safe and high quality food products,
including confectionery, biscuits and extruded snacks.

Companys background
B.P Industries Private Limited has been a well-known name in the confectionery industry of
Pakistan since more than fifty years. In fact the company was established even before the time of
independence, being named after Bhagwan Paridas (B.P) who sold the company during the
partition in exchange for a leather factory in India. The company was the pioneer of confectionery
items in Pakistan.
It is a family-run business; and the founder of B.P Industries, Mr. Anwar Yahya, till today manages
the organization with his two sons, Mr. Nadeem Yahya (Managing Director) and Mr.
NaveedYahya (Deputy Managing Director). Over the years, the company has managed to be
maintain its name for quality and taste, and has sustained its position as part of the organized sector
of the confectionery industry market. The company is not only a recognized name within Pakistan,
but also exports to countries such as Afghanistan, U.A.E, Lebanon, and Turkey. The company has
a widely expanded distribution network spread across more than three hundred towns throughout
Pakistan.

The company initially began, merely offering the product line of chewing gums; however, today
it has managed to manufacture a multiple range of product lines, from jellies, candies, chocolates,
chews, lollipops to even biscuits and wafers. And some of its most famous brands include:

Paint n Pop Loly

BP Dolphin Jelly
BP Spacer toffee
BP clairs

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Organizational structure of the company

Companys Organogram

Media Manager
GM Marketing
Brand Manager

GM Business
Development

Chairman

GM Sales

Manager Audit
Managing Director

GM Engineering

Manager Business
Development
DGM
Sales
Manager
Engineering

Deputy Managing
Director
Director Operations

Manager Production
GM Production
Manager Purchase

GM Quality Control

Managers Quality
Control

GM Administration

Manager
Administration

GM Finance

Asst. Manager
Finance

Manager Imports

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B.P Product Lines

B.P offers a wide range of products to its target consumers. It is especially vital in the confectionery
industry to be present in every product line in order to survive the cutthroat competition between
the key players in the market. As mentioned above the company initially started only with the
manufacturing of chewing gums, however today it manufactures an extensive range of product
lines including chocolates, chew toffees, lollipops, candies, jellies, bakery items and biscuits and
wafers as well.
Basically the companys manufacturing process is divided into departments, where each
department is responsible for achieving its production targets efficiently and effectively. The
following is a list of departments and their overall responsibilities.
B.P offers a wide range of products to its target consumers. It is especially vital in the confectionery
industry to be present in every product line in order to survive the cutthroat competition between
the key players in the market. As mentioned above the company initially started only with the
manufacturing of chewing gums, however today it manufactures an extensive range of product
lines including chocolates, chew toffees, lollipops, candies, jellies, bakery items and biscuits and
wafers as well.
Basically the companys manufacturing process is divided into departments, where each
department is responsible for achieving its production targets efficiently and effectively. The
following is a list of departments and their overall responsibilities.

Purchase Department

Raw Material Store

responsible for the

purchase of all raw
materials for the
manufacture of the
product as a finished good

responsible for the daily

supply of raw materials
needed to meet the
production targets of each
department

Quality Control
Deparment
responsible for
maintaining quality of all
product till they are packed
as finished goods.

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The company is divided into various departments, where the manufacturing process is located in
the department depending on the form of the product. The departments include

Chocolate Department: This department manufactures all products which include the solid
form of chocolate, as well as the sugar coating processes in product lines such as jellies and
chocolate beans. For example, some manufactured products in this department include BP
Mask, Houbara Eggs, or the sugar coating of BP Jelly Belly
Spacer Department: This department manufactures chew toffees, including products such as
BP Spacer and BP Doodh. Compared to other departments, this is the department with the state
of the art U1 Machines, which include not only the manufacturing of the product itself but the
packing as well.
Loly Department: This department manufactures all hard-boiled sweets such as lollipops,
candies, and toffees as well. In fact this department also includes state of the art machines,
which are efficient not only in terms of cost but speed as well. Some manufactured products
include Khopra Candy, BP clair toffee, and BP Ruler Candy
Chewing Gum Department: This department manufactures stick gum, as well as the packing
of the products as well.
Bakery: The bakery items are manufactured in this department, even though they are
distributed only within the city of Karachi. Some of the most popular bakery items include BP
Bread and Fruit Bun.
Jelly Department: Due to the nature of this case, this department would be discussed in much
more detail below. However to give an overall view, this department manufactures all jelly
products of the organization, including the packing of the products as well. There is a single
jelly plant, which caters to the entire manufacturing of the different varieties of jelly products.
For example, BP Dolphin Jelly and BP Burger Jelly.
All in all, even though the departments are divided within the organization, however there remains
integration between the departments; and this is an integral part of the manufacturing process. For
example, a product such as BP Ruler Candy, even though it is manufactured in the Loly
Department since its a hard-boiled candy, however it is packed in the Chocolate Department since
this department fulfills the packing requirement of the product, as blister machines are located in
this department. Thus for the efficient process of manufacturing of the different product lines, an
integration and assimilation between different departments is vital.

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The Purchase Department at B.P Industries Pvt Ltd.

The process of Purchase starts from the store where the inventory for Raw Materials is held at B.P.
In the event of a need arising due to low stocks, store generates a Purchase Requisition document
that is known within the company as Indent. Then the Manager Purchases, Nisar Sb. check the
inventory to see that the Indent is justified and that the need is actually there for the materials. B.P.
has a list of suppliers for its multiple raw materials used during production of its vast array of
products including Rafhan, Habib Oils and IFFCO to name a few. The purchase with these
suppliers is usually straight forward due to a long term relationship and the magnitude of the
required materials. In other cases the suppliers are situated at Jodia Bazar and the local places
where the suppliers have to be dug out and the prices have to be negotiated. Otherwise the big
orders and suppliers, which constitute around 80% - 85% of the purchases, Nisar Sb. checks out
the prices charged for the last order. Having found out the requisite details, the indent is then
forwarded to the Accounts department.
The accounts department carries out further checks to check the date of last delivery, the price
charged for the order and the quantity ordered at the time. Having considered all of those and the
indent, it is then forwarded for a check and approval by the Director (Corporation), Ms. Sana
Nadeem, and then on to final approval by the Deputy Managing Director, Mr. Naveed Yahya.
After the approvals of the indent, it is received at the accounts department and a copy of it is sent
to the store and Purchase department. The accounts department then uses the original Indent and
approval for the generation of the Purchase Order.
Having dispatched the purchase order to the supplier, the follow up is carried out by the Purchase
Manager who keeps a check on the delivery and transit of the materials and confirmation of the
date of receiving. Once the goods arrive at the Plant, the process for receiving and storage begins.
The supplier will park the goods outside the premises and will have to go to the Accounts
department with the Purchase order and the Indent. The Accounts department checks the goods
delivered against the original indent and then issues a permission slip for the gate to allow the
goods to be stored. There is an entry done at the gate and the truck is weighed before entering the
premises. Then the goods are moved towards the storage area. After receiving the goods, the Goods
Receiving Note is generated by the Inventory people and the Quality Control Department is
contacted. The QC Deptt. promptly checks the good against their local service measures and
having approved the raw materials, only then can the raw materials be stored. The truck that brings
the materials onto the premises is again weighed at the exit to find out the exact amount of materials
dropped and checked against the inventory calculations.
Now that the raw materials are inside the storage area, Material Issue Note is then needed for the
Store to issue the material to the relevant department.

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For the payment process, the supplier sends the invoices to the Store and Purchase Manager. Here
the invoices are checked against the GRN, then a document is made which incorporates the
Invoices, GRN, QC Report, Payment slip and the permission slip form the gate and this bill goes
to the purchase department for further processing. The Purchase Manager checks and makes sure
that the quantities and prices are in order and then forwards the bill to the Accounts Department.
The accounts department runs another check and scrutinizes the documents attached and forwards
the bill for cheque issuance after confirmation. The final approval and sign comes from the Deputy
Managing Director or the Managing Director. This is the complete process at B.P Industries Pvt.
Ltd. for Raw Materials and Stores purchase. And this sums the purchase department involvement
in the Operations.

Procedure for Capital Expenditure at B.P

The process for the purchase of capital equipment is as follows:
The machine or any capital equipment is chosen by the Directors, Deputy Managing
Director and Managing Director. They figure out what the equipment is and what the need
is and if it offers a good fit then the machine is bought. This is done through research or
through the visits to various exhibitions and trade fairs. The discussion is then taken forth
to the technical staff and imports department which looks after the purchase of equipment
and machinery from abroad. Having incorporated their opinions the top management
makes the choice. And requests a Performa invoice from the supplier.
Supplier selection is done on the basis of price, after sales service and the terms and
conditions of delivery and shipment. The B.P. Industries usually does the trade on C and F
basis. These terms are negotiated with the price and are done at the earlier stage of
purchase.
Simultaneously the Banking Channel is brought into motion for the financial matters. Of
supreme importance is the settlement and establishment of the Letter of Credit. For the
letter of credit the bank actually asks for an advance to be kept in the bank account. Also
of importance is the credit history of the company and the borrowing limit that they have
already extended to the Company. B.P. Industries has an industrial account that allows
them a large limit and also MCB has been a long term partner for B.P. Industries so that
allows them some consideration in their dealings.

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 Documents required for Letter of Credit include LC Form, letters that MCB expressly asks
for, Appendix D, Terms and Conditions, Payment Terms, Insurance policy, Insurance
Cover Note (EFU) and Form I. These documents need to be perfect in order for the LC to
be issued by MCB.
Once the LC is issued and the terms and conditions dealt with the advising bank informs
the supplier and supplier agrees to the sale. The supplier ask for a 45-60 days window in
which the machine is packed and shipped to port. Shipment is the last major issue to be
resolved. The shipment as per the C and F terms and conditions is done by the supplier and
after shipping is done, the shipment date and documents are provided by the supplier. These
documents are non-negotiable and are provided within 1 week. The original documents are
then forwarded to the advising bank which keeps a copy with itself and passes the originals
to the applicant bank. These documents are then made available to the B.P. Industries
which in turn forwards to a clearing agent assigned to deal with Customs charges and
matters.
The clearing agent is required to get the shipment passed and processed and cleared. The
charges paid and the matters are typical and therefore the clearing agent becomes necessary
to get clearance. However at every turn and payment the clearing agent requires permission
to go ahead and make it by the Imports Manager. Consignment is then cleared and taken
to the warehouse.
Technical engineer is sometimes provided by the supplier. In such a case the VISA and
local paperwork is carried out by B.P. Industries. The technical staff documents are also
submitted to Chamber of commerce. In most cases though, the technical assistance is
employed locally and foreign engineers are rarely invited.
Most of the capital equipment purchased comes from China and Italy and the planning and
discussion period is usually 3 months long. The planning phase has a lot of meetings
between hierarchy including MD and DMD with engineers and middle level staff.

The research done is usually online and through exhibitions and trade fairs. Another source
of information is the competition analysis and this provides ideas as to what else can be
done to improve their own operations.

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SWOT Analysis
Strengths

Favorable purchasing terms may be set for purchasing of bulk quantity at an optimal
low price
Centralized purchasing structure while major purchasing (80% -85% in volume) is
done through preset suppliers
Centralized purchasing policy is in place that eliminates redundant or duplicate
efforts
Allow Raw Material Store better control of inventories
Standardized top-down information flow model is followed
Centralized records of all purchases

Weakness

There may be some delay in receiving material because of standardized central

procedures
Fixed delay of time in payment to suppliers because of trivial payment procedures
The rare/non-regular specific requirements may not enjoy the economies of scale
Due to centralized buying - greater chance of wrong buying because of absence of
mind between requester department and purchasing department
Timely replacement of defective material might be a challenge that needs further
exploration of B.P industries policies

Opportunities

BP can sub-contract production for new product lines and making changes in existing
product lines, in spite of making huge investment on such in house productions.
Sub-contracting may also be helpful in saving planned capital expenditure
Achieve desired quality standards of items
Procurement department has opportunities to make capital expenditure that fits in
with the agreed business strategy
Company may differentiate itself by its products
Opportunity of expansion of business by making expenditures to make distribution
channel efficient and effective
Invest in IT systems to improve management control and profitability

Threats

Increased competition from the companies like Hilal, Cadbury, and Giggly etc.
Procurement department should be careful to become the victim of lack of financing
plan
Increase in capital cost of move, which is required for flexibility, is also a threat for
the procurement department
Customer base erosion to other brands
Lack of efficiencies of marketing and promotional activities to ensure the brand
loyalty
Increased number of internet retailing competition may also become a threat for the
capital expenditures of the company
Lack of company to be innovative is a great obstacle to survive
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Recommendations:
B.P Industries should form a formal standard operating procedure (SOP) guideline
document for purchase of raw materials. This will help the company to streamline and
follow the best practices in sourcing and in an organized way.
The organization as a whole should invest in technology such as ERP systems to better
support the flow of information and procedures in the company. This will allow them to
better manage their processes.
The company should focus on maintaining and managing their relationships with their B2B
customers because most of the manufactured products are targeted to B2B clients. The
Company should form a B2B customer support department that can work closely with the
purchase department to cater to their needs.
The company should invest in marketing to improve its image and relaunch itself as a B.P
brand focusing on innovation and providing high quality to customers.
The company should invest in improved machinery and streamline the processes to become
more efficient.
The company should also invest in Human Resource as well that can be integrated with
different department including purchasing in order to provide better experienced personnel
according to the department requirements.
Procurement division of BP should play its role to make BP a company contributes as
economic and employment backbone of the economy as well as driving force for
innovation, employment promotion and value added production.
Procurement division can make expenditures, either capital or revenue, in such a way that
BP can emerge as a more knowledge intensive and growth oriented business.
Expenditures can be utilized in R&D activities to give existence to different approaches,
methodologies, and tools.
Procurement division can plan fund flow in a way that different policies and tools are
formulated to overcome specific bottlenecks of the company.
Procurement division can play its role in increasing the ability of the company to identify
new markets due to its export and expansion potential.
Through utilizing the expenditure at suitable place, procurement division can help the
company to meet the challenges and potentials of developing transformation and
industrialization.
Procurement division should invest in assets that can help company to be an entrepreneur
like market orientation, entrepreneurship, and search for business opportunities.
Procurement division can assist company to make possible to promote skill development,
market knowledge, and market information.
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