REFRIGERATOR & HOME

APPLIANCES INDUSTRY OF
PAKISTAN- FOCUS ON
DAWLANCE

SUBMITTED TO: SIR ASGHAR REZA

SUPPLY – DISTRIBUTION - MANUFACTURING 1

 INTRODUCTION
Refrigerator market of Pakistan is growing every minute and is creating potential in best
manner from international investment. Example: Arcelik acquired Dawlance.

With growth of around 3.5% every year, there are many regions that are untapped. Grey
markets still caters a considerable amount of sales.

50%of the population is under 50 years of age, and the country’s per capita income is around
$1500, which is expected to grow to $2000 in the next eight years. All of these are rising
demand signals. The potential is huge in Pakistan.

SUPPLY CHAIN MANAGEMENT 2

 PRODUCT OVERVIEW OF INDUSTRY PLAYERS
Brands Products
Haier Refregerators - Air-Conditioners- Microwave Ovens - Deep Freezers - Washing Machine - LEDS - Laptops - Water Dispensers - Small Home Appliances
Orient Refrigerators - Air-Conditioners - Microwave Ovens - LEDs - Water Dispensers
Gree Air-Conditioners
Dawlance Refregerators - Air-Conditioners- Microwave Ovens - Deep Freezers - Washing Machine - Water Dispensers - Small Home Appliances
Waves Refrigerators - Air-Conditioners - Microwave Ovens - Washing Machines -Small Home Appliances
Panatron Refrigerators
Pel Refrigerators - Air-Conditioners - Microwave Ovens -Deep Freezers - Water Dispensers
Kenwood Air-Conditioners - Microwave Ovens - Small Home Appliances

SUPPLY CHAIN MANAGEMENT 3

 COMPETITIVE ANALYSIS OF KEY MARKET
PARTICIPANTS
Key Distributor Marketing Consumer Price Perceived
Players Network Preference Quality
Haier 3 3 3 3 3

Orient 3 4 3 3 4
Dawlance 5 4 5 4 4
Waves 3 2 3 2 3
Panatron 2 2 2 2 2
Pel 4 4 4 4 4
 DISTRIBUTION CHANNELS OF MARKET
PARTICIPANTS
Procurement ( Imports + Local )

MANUFACTURING (FACTORY)

WAREHOUSES

DEALERS

END CUSTOMERS
DISTRIBUTOR SYSTEM FOLLOWED IN THE INDUSTRY

DISTRIBUTOR GUARANTEES A DEFINITE AMOUNT

OF SALES.

REQUIRES A CERTAIN INCREASE IN INCENTIVES

(MONTHLY/ ANNUAL) AS COMPARED TO NORMAL
DEALERS.

CIRCULATE YOUR PRODUCTS TO EVERY REGION

OF THE TERRITORY GIVEN BY THE COMPANY.

HAVE RESTRICTION IN GOING ACROSS YOUR

TERRITORY.

MOREOVER OVER THE TIME THE DISTRIBUTOR

GETS STRONGER AND DICTATE TERMS IN THE
LONG RUN.

SUPPLY CHAIN MANAGEMENT 6

DISTRIBUTOR SYSTEM FOLLOWED IN THE INDUSTRY
CHALLENGING ENVIRONMENT
FOR COMPANIES DEALING IN
DEALER NETWORK.
LUCRATIVE AND ATTRACTIVE
INCENTIVE FOR UNIFORMED
PRICING AND MORE REWARDING
FOR THE DEALERS.
LESS MARKET SHARE BUT WITH A
VERY STRONG DEALER NETWORK
MORE CONTENT CAN BE
INTRODUCED TO THE MARKET
AND BE SUPPORTED BY THE
MARKET DEALERS.
PRICES OF THE PRODUCTS HAVE
TO BE COMPRISED DUE TO TOUGH
PRICING COMPETITION IN THE
MARKET.

SUPPLY CHAIN MANAGEMENT 7

MARKET SHARE ANALYSIS OF REFRIGERATOR
INDUSTRY IN PAKISTAN
3%

15% DAWLANCE

33%
PEL

HAIER
20%

ORIENT

OTHERS
29%

SUPPLY CHAIN MANAGEMENT 8

 NATIONAL SALES 2016 REFRIGERATORS
BRANDS SALES

DAWLANCE 465000

PEL 421000

HAIER 280000

ORIENT 220000

OTHERS 40000

TOTAL 1,426,000

NOTE: Others include small brands like Gaba-National,

ChanghongRuba, Waves, Singer, Panatron & Imported Brands.
 NATIONAL SALES 2015 REFRIGERATORS
BRANDS SALES

DAWLANCE 445000

PEL 423000

HAIER 205000

ORIENT 240000

OTHERS 35000

TOTAL 1,348,000

NOTE: Others include small brands like Gaba-National,

ChanghongRuba, Waves, Singer, Panatron & Imported Brands.
 NATIONAL SALES 2014 REFRIGERATORS
BRANDS SALES

DAWLANCE 425000

PEL 405000

HAIER 230000

ORIENT 220000

OTHERS 30000

TOTAL 1,310,000

NOTE: Others include small brands like Gaba-National,

ChanghongRuba, Waves, Singer, Panatron & Imported Brands.
 SEASONAL DEMAND FOR HOME APPLIANCES
Produc January Februar Marc Apri May June July Augu September Octobe Novembe Decembe

MA
t y h l st r r r

SUPPLY CHAIN MANAGEMENT 12

ROOM REFRIGERATOR
Cities like, Hyderabad, Sukkur, Brands Cities Sales
Gujranwala, khairpur, Quetta,
Khanewal and others small
towns and cities do face SG KHI-HYD 3500+
shortages in smaller
segments of refrigerators
from 7-9 Cft.
Panatron Ryk-Qta-Guj 3500+

Companies follow to cater

bigger maarkets first and
Gaba Suk-Krp-Fsd 3500+
thaat’s where smaaller
companies like Gaba-
National, Panatron, SG &
others comes in to play their
key role.

SUPPLY CHAIN MANAGEMENT 13

 SUPPLY CHAIN FUNCTION OF REFRIGETOR
INDSUTRY

Supply
Chain

Production
Logistics &
Planning and Procurement
Warehouse
Control

Production Stores (Raw Finish Goods

Planning Imports Local
Control material ) Warehouse

SUPPLY CHAIN MANAGEMENT 14

SUPPLY CHAIN MANAGEMENT 15
 PRODUCTION UNITS

Dawlance has three units in their production department;

DPL-1 (Dawlance Private Limited)
DPL-2 (Dawlance Private Limited)
URIL (United Refrigerators Ind. Ltd)

SUPPLY CHAIN MANAGEMENT 16

 DPL-1 (DAWLANCE PRIVATE LIMITED)

The DPL-1 unit of production department produces washing machines and

small size refrigerators.

SUPPLY CHAIN MANAGEMENT 17

 URIL (UNITED REFRIGERATORS IND.LTD)

The URIL unit of production department produces big models refrigerators

and deep freezers.

SUPPLY CHAIN MANAGEMENT 18

 PER DAY PRODUCTION OF DPL-1

The per day production of

Refrigerator 800 to 1000

SUPPLY CHAIN MANAGEMENT 19

 PER DAY PRODUCTION OF URIL

The URIL units produce almost 1000 to 1200 big size refrigerators in a single
day

Machinery of the production department

The machinery which company use in their production department to make
different products.
HLD-420Z (use for forming of refrigerators)
WG16-B ( use for injection molding in refrigerator)

SUPPLY CHAIN MANAGEMENT 20

SUPPLY CHAIN MANAGEMENT 21
 INBOUND LOGISTICS

• Mostly suppliers supply the goods with their own

transport.

• Some suppliers don’t offer transport and Dawlance

pick the material by their own Transport.

• Dawlance local purchase department also has a Suzuki

to use in any urgency.

SUPPLY CHAIN MANAGEMENT 22

 IMPORTS LOGISTIC

Import of Dawlance depends upon high value items that are used in manufacturing
of fridge, washing machines, air conditioner, micro wave etc. They import their
material from;
1. China
2. Malaysia
3. Saudi Arabia

SUPPLY CHAIN MANAGEMENT 23

 OUTBOUND LOGISTICS

For Outbound Logistics, Dawlance use the services of PTN. PTN takes the goods from
factory warehouse to warehouses. Dawlance have their own warehouse located in
National Highway Landhi, Karachi in which all the finished goods placed in a separate
portion. They make supply from their warehouse to all over the Pakistan through the local
transport of that area.

SUPPLY CHAIN MANAGEMENT 24

SUPPLY CHAIN MANAGEMENT 25
 LOCAL PROCUREMENT

If we talk about the local procurement of Dawlance so will see

that they also classified its local procurement department:

• Production Items purchasing (Direct Material)

• General Items purchasing (Indirect Material)

SUPPLY CHAIN MANAGEMENT 26

 PROCUREMENT WORK FLOW
P2P Cycle (Purchase to Pay)
PURCHASE

Select Suppliers, Price Inquiry,

Costing, Negotiations, Price
Approvals

Issue Purchase Orders after

Intimate Purchase for Re- getting it approved by the Intimate Purchase to Resolve
working / Return authorities. the matter

Supplier 1 Supplier 2 Supplier 3

Receiving Invoicing
Found
Check Discrepancy!
Reject SQA Check
PO/MSR

OK OK
Store Dept. Receive the Submit Invoice in
PAYMENT
material. FINANCE

SUPPLY CHAIN MANAGEMENT 27

 IMPORT PROCUREMENT

They import different kind of raw materials but the main imports are the kits of
Air Conditioner and different models of Washing machines and Microwave
ovens as a finished good.

Country of Import:
Dawlance import the raw materials and the finished good from
different origin like China, Malaysia etc.

SUPPLY CHAIN MANAGEMENT 28

 IMPORT WORK FLOW
PLANNING Availability Status, Delays, Local purchase & other related matters

Material Major Controlling through ETD Report

Can be PR
purchase
locally, If
Issue P.O to FINANCE
N-A in Search Supplier Dept. along with; Finance Dept.
Import Quotations Performa Invoice opens L.C. against
IMPORT
Negotiations Covering Sheet P.O. % Send it to
Receive P.I. Inventory Sheet the supplier.
Negation Details

PURCHASE
Send Shipment Details to Import
SUPPLIER

SUPPLY CHAIN MANAGEMENT 29

 PROCURE TO PAY PROCESS
Purchase requisition
Creating Purchase Orders
Communicating PO to Supplier
Confirm Receipt
Quality Check

SUPPLY CHAIN MANAGEMENT 30

 EXTERNAL PURCHASING(IMPORTS)
Some of the production items they purchase from the other countries. Those items are
• For Refrigerator
Condensers
Compressor
Light kit
• For Washing Machine
Timer
Motors
• For Micro Wave Oven
Dawlance import the overall kit of the microwave oven from the other countries. They only
assemble the parts of the microwave in the company

SUPPLY CHAIN MANAGEMENT 31

 PROCUREMENT CYCLE

Purchase Purchase Generate

Requisition Department Purchase
Order

Supplier Quality Communication

Delivery
Assurance To Suppliers

Deliver To Store Payment

SUPPLY CHAIN MANAGEMENT 32

PROCURE TO PROCESS

SUPPLY CHAIN MANAGEMENT 33

 SUPPLIERS

The company has different suppliers for different purchases.

• The company has almost 300 active suppliers for the purchasing raw
material of local supplies.
• The company has almost 200+ general suppliers.
• The company has almost 20+ international suppliers.

SUPPLY CHAIN MANAGEMENT 34

Supplier
SCM MODEL
1
Retailer Retailer

Manufacture
Supplier (Outbound)
2

Manufacture Warehouse

Supplier (Inbound)
3

Warehouse
Supplier
4

Distribution
Logistic
Procurement Transportation
 MAKE OR BUY

To focus on their core competencies, Dawlance make only those parts in

which they are well capable. They make Refrigerator Liner, washing
machine tub, power codes, injection molding items etc.

As they are not well capable in making washing machine pipes, Trims,
profile etc so they don’t make this and instead of this they procure these.

SUPPLY CHAIN MANAGEMENT 36

SUPPLY CHAIN MANAGEMENT 37
 1. SUPPLY CHAIN STRATEGY
Planning Workflow
Planning Department Forecasting, F.C. Revision
Demand Fluctuations,
Priorities, etc
(PSI) Prod.
Sales / Marketing
Sales Inv. What to
Produce?
Forecast
N+4 How much to
be Produce? MPS Production Control
Store
MRP When to be
Inventory
produced?
WIP
Inventory Materials
Requirement PR
On-Order
Quantities
Shortages, Plan Change, PURCHASE
Follow-ups etc

SUPPLY CHAIN MANAGEMENT 38

 WAREHOUSING COMPARISON OF REFRIGERATOR
INDUSTRY
Daw PEL Haier Orient Waves
KHI KHI LHR LHR KHI
Hyd LHR KHI KHI LHR
SUK MUL MUL RWL RWL
MUL RWL GJR PSH RYK
RYK PSH RWL RYK
FSD
LHR
GJW
GJR
Harro

SUPPLY CHAIN MANAGEMENT 39

 2. SUPPLY CHAIN PLANNING

• To focus on their core competencies, Dawlance make only those parts in which they are well
capable. They make Refrigerator liner, washing machine tub, power codes, injection molding
items etc. As they are not well capable in making washing machine pipes, trims, profile etc so
don’t make this and instead of this they procure these.
• They have very strong logistics system and use 3PL logistics system and Dawlance own
controlled logistic system to full fill their need for both upstream and downstream so they hire
services.
• All the electrical appliances bought with Dawlance brand has given 5 years warranty and any
product having manufacturing or technical fault will be free of cost.

SUPPLY CHAIN MANAGEMENT 40

 3. SUPPLY CHAIN OPERATIONS

Dawlance follow the push strategy and their planning department plan according
to this strategy. As Dawlance deals in home appliances (mostly Refrigerator & Split) so
their demand is not constant in all seasons. So by considering this they follow this
strategy because they can’t produce for the whole year in 6 to 7 months so that’s
why they even produce in the period in which demand is low.

SUPPLY CHAIN MANAGEMENT 41

 PEST ANALYSIS
Political
The country is passing through the dark stage of the
history facing security and instability problems.
Government is not in position to provide funding for
the company growth and is not in the position to go
for international legislations. International trading
policies are worst and corruption is very high.
Social
Most of the people of the country are living in rural
areas, unaware of the products and its benefits. These
people don't like products TVs because of religious
concern. The people in these rural areas like manual
work and don't like machinery. Female normally don't
visit shops and don't work. Most of the people can't
afford to buy.
Economic
Due to recent global economic crisis the company is
facing a lot of problems. Tax rate is high and the retail
market seems to be going down.
Technological
Technology is growing day by day. The company has
latest machinery and has highly qualified engineers
and professionals. The cheap technology of china has
brought a new revolution not only in Pakistan but in
the whole world.
SUPPLY CHAIN MANAGEMENT 42

PORTER
FIVE FORCES
Threat of Substitutes HIGH
As we talk about Dawlance , is facing a threat from the growing
number of substitutes available in the market like in Pakistan the
biggest threat for Dawlance are the Chinese products, which are
serving as an alternative choice for the consumers. These products are
low-priced and people can simply afford them.
Bargaining Power of Suppliers LOW
Dawlance is efficiently working with its suppliers by creating balance
between the supplier’s powers and interests of the company. So
Dawlance is signing long-term agreements with suppliers concerning
the raw materials, which can save the company from prices fluctuations
of the materials
Threat of New Entrants MEDIUM
Dawlance is facing the threat of new entrants in the home appliances
industry. The new entrants can be potential competitors for the company
and can severely dent the company and can affect company’s market
share. The new entrants are entering in he market because of Active
returns and foreign brands.
Bargaining Power of Customers HIGH
In Market there are so many substitutes present for home appliances
products, specifically foreign brands and Chinese products as Dawlance
can affect by such situation that the bargaining power of consumer
remains high and consumer demands to decrease the prices of
Dawlance products. If company does not work accordingly it will affect
Dawlance market share, as consumer will switch to any other brand.
Competitive Rivalry in the Industry HIGH
Dawlance is coming up with more innovations as the competition is
increasing day by day and many competitors like LG, Sony and Haier etc
are competing in the market and to survive in the market Dawlance is
focusing on innovative home appliances for the customers to increase
the profit of the organization and to gain the edge over its competitors.
SUPPLY CHAIN MANAGEMENT 43
RECOMMENDATIONS

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SUPPLY CHAIN MANAGEMENT 45