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SUPPLY CHAIN MANAGEMENT

Acknowledgement

First of all we are grateful to the blessings of Almighty ALLAH who gave us ability to complete

the project in an appropriate manner. We also gratefully acknowledge the immense help of our

respected and extremely encouraging course Instructor, Dr. Shujaat Mubarik, who remained

crucial in the process of preparation of this report. We acknowledge his guidance, help and

cooperation, without his cooperation this project work would not have been possible. He made

our concepts clear about the project as well as about the course ‘’Supply Chain Management’’.

We are thankful to Mr. Faisal Saeed Asst. Global manager K & N’s for giving time to us and

sharing information regarding our project. We also thank the appreciation and guidance of our

parents who gave us encouragement whenever we faced any difficulty in the way of academic

life and particularly for the accomplishment of this project.

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Table of Contents

INTRODUCTION....................................................................................................................................... 3
HISTORY .................................................................................................................................................... 3
PLANNING ................................................................................................................................................. 4
FORECASTING ......................................................................................................................................... 4
PRODUCTION METHOD AND PROCESSES ...................................................................................... 5
PRODUCTION METHODS ...................................................................................................................... 5
Poultry Breeding ......................................................................................................................................... 5
Hatching ....................................................................................................................................................... 5
Feed Milling ................................................................................................................................................. 6
Poultry processing....................................................................................................................................... 7
RELATIONSHIP MANAGEMENT ......................................................................................................... 8
Quality Assurance Lab ............................................................................................................................... 8
Poultry Diagnosis & Research Institute .................................................................................................... 8
K & N’S COMPITORS AND COMPETITIVE STRATEGY ................................................................ 9
K & N’S DISTRIBUTION NETWORK ................................................................................................. 10
DISTRIBUTION OF K & N’s PRODUCTS .......................................................................................... 10
Distribution System & Chicken Stores ................................................................................................... 10
K & N’s NETWORK DESIGN ................................................................................................................ 11
K & N’s FRAMEWORK OF NETWORK DESIGN DECISION ........................................................ 12
INVENTORY MANAGEMENT ............................................................................................................. 13
STORING PROCEDURES...................................................................................................................... 13
REASONS WHY K & N’s MAINTAIN RAW MATERIAL INVENTORY? .................................... 13
WAREHOUSE/STORING MANAGEMENT SYSTEM ...................................................................... 13
PRACTICES OF KEEPING GOOD INVENTORY MANAGEMENT .............................................. 14
SOURCING DECISIONS –1st CROSS FUNCTIONAL DRIVER ..................................................... 15
BROILER AND OTHER RAW MATERIALS ..................................................................................... 15
K& Ns SUPPLIERS .................................................................................................................................. 15
SOURCING STRATEGIES & PROCUREMENT PROCESSES ....................................................... 15
Challenges Faced by K & N’s .................................................................................................................. 16
CONCLUSION ......................................................................................................................................... 17
GALLARY................................................................................................................................................. 18

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INTRODUCTION

HISTORY

The year 1964, Pakistan was a young independent nation forging ahead towards a dream, self-

sufficiency in food production. Malnutrition remained a major problem and one out of four

children died before attaining the age of five. 80% of the ailing children were affected with

diseases caused by protein, vitamins and minerals deficiency. Poultry production, the quickest

and least expensive way of filling the protein gap was planned to overcome malnutrition.

Backyard poultry farming has to graduate to a more professional level. In January 1964, a young

man, Khalil Sitar, still a college student, had a vision to foresee a need to establish a poultry

farm. His interest led him to start a broiler farm of 1,000 chicks. Little had he known this flock

was to become the foundation stone of K& N’s? This was the simple, inspired and nationalistic

beginning of K&Ns with a single minded objective of providing better nutrition for health and

happiness of the nation

COMPANY MISSION

Driven by its basic values in pursuit of perfection, K&N’s is committed to have superior

products and unmatched service through devoted people and consistent development.

Providing the best hygiene and nutrition for the health and happiness of the nation being our

very first promised makes us remain stick to our commitment to the customers rather look for

what one may call better for one’s self. The increasing demand of our products all over the

country explains the worth; our promises are getting through our valuable customers’

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PLANNING

The planning depends on international market demand and the company start planning before 5

to 6 months when their peak season is coming, for example ramzan, Eid. They complete their

production process for peak season before two month and start distribution and supplying of their

product to markets, there planning method is very strong that's why they complete their target

before the time. Foreign countries where the co. export their products UAE, Oman, Saudi

Arabia, Qatar, Bahrain, and Hong Kong. Their distributors every time share stock report along

company so co. make demand base planning and order movement base forecasting.

They are providing raw meat to local market and international market. Value added products are

nuggets, bakistry, samosa, etc. and verity of products. In the peak season their products sale

raise in both market local and international like nuggets, samosa (raw poultry products qeema,

chicken). K&N’s ask to their distributors for stocks how much they need, let suppose they need 4

containers for Ramadan so K&N’S start planning from production till deliver to distributors

before 5 months because the production process takes time and shipment to. The company

responsible for deliver the consignment before 2 months so distributor send them to warehouse

and stores. The K&N’S sale their products to distributor on cash.

FORECASTING

For forecasting they collect demand from their distributer and forecast according to that data.

They forecast for the peak season before 5 to 6 months before the peak season. They don’t use

any kind of such a forecasting method. Their forecast for demand is according to the season.

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PRODUCTION METHOD AND PROCESSES

PRODUCTION METHODS

Depending upon the type of product, production method is used. For instance, raw chicken

&special cuts are produced on the Automated / Semi automated lines, whereas, Value added

products are produced through Fully Automated Process in K & N’s processing departments.

Poultry Breeding

K&N’s maintains layer and broiler parent stock populations in different regions of Pakistan.

Layer parent stock farms are located in the south and broiler parents are bred in the colder

mountainous northern region. Both types of parents are housed at isolated breeder farms.

K&N’s operates several strategically located hatcheries covering all day-old chick markets to

ensure delivery of high quality layer and broiler day-old chicks to commercial farmers

throughout Pakistan.

Strict bio-security measures are taken at all farms to reduce the risk of disease transmission

through mechanically and physically transferred disease causative agents. Careful attention is

paid to bird health, vaccination, weightiest and selection to maintain healthy and uniform

breeding flocks. Hatching-eggs are cooled down inside air conditioned, humidified egg-rooms,

packed and dispatched in sanitized and environment-controlled vehicles to company owned

hatcheries located throughout Pakistan.

Hatching

All hatcheries are equipped with most modern cooling, heating and humidification systems to

provide a uniform and consistent hatchery environment independent of varying outdoor weather

conditions. Incubators from world-renowned manufacturers are installed at all hatcheries and

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their performance data is recorded and monitored by a computerized incubation monitoring

system.

Upon arrival from breeder farms, hatching-eggs are candled at all hatcheries to remove eggs,

which may have cracked during transit. Sanitation and hygiene is enhanced by mechanically

transferring eggs from one type of tray onto another until chicks are harvested from hatchers.

Maximum care is exercised while handling, reconstituting and administering vaccines using

Proper techniques and modern equipment. To ensure chicks get off to the healthiest start and stay

protected from viral diseases, they receive inject able and spray vaccinations at the hatchery.

Broiler Growing

In addition to supplying day-old chicks to farmers, K&N’s is also engaged in broiler growing at

company owned farms to produce broilers for our poultry processing plant. Under the watchful

eye of our own poultry nutrition, health and housing specialists, they grow-up in large, clean and

airy houses equipped with state-of-the-art heating, cooling and ventilation equipment. The

chickens freely strut around, breathe fresh air, eat at will and drink fresh, cool and pure water.

We really mean pure water as our chickens do not drink water from troughs, which can lead to

water contamination.

Feed Milling

To ensure consistent performance with high standards, our chickens really live on a healthy and

well balanced diet. It is based on: natural grain products such as corn, corn gluten, rice and

wheat; oil seed meals such as soybean, canola and sunflower; fish; oyster shells supplemented

with multi-vitamins and minerals. Feed is always tested by our quality assurance lab to ensure it

is wholesome because K&N’s does not compromise on quality. Feed is also supplied to our day-

old chick customer’s and growers for realizing the profit potential of K&N’s quality day-old

chicks.

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Poultry processing

At our state-of-the-art poultry processing plant, only healthy chickens are used to produce high

quality, safe and healthy chicken products. Chickens are Halal slaughtered by hand (Islamic

Zabeeha) strictly according to The Shariah.

After Halal slaughter, chickens are processed in the most hygienic and automated manner.

During processing, the birds are washed inside out and our veterinarians constantly examine the

birds to confirm they are wholesome. Cleaning is constant and each evening the entire operation

is completely washed and sanitized. Only after very thorough inspection, the plant begins Supply

Chain Management of K & N’s operation each day. All chickens pass through veterinary

inspection to confirm they are wholesome.

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RELATIONSHIP MANAGEMENT

K&N’S using collaboration relationship with distributors and providing the brand name e.g.

(advertising, shelf’s etc.) K&N’S main focus on quality as per quantity. Their prices are high but

quality is good e.g. big bird came in the market but they were focusing on quantity as per quality

and their prices were high.

Quality Assurance Lab

K&N’s state-of-the-art Quality Assurance Lab monitors the entire integration process, from

livestock to feed and on to preparation of ready-to-cook & fully cooked products. The entire

integration process is monitored and regulated to ensure K&N’s chicken products are

wholesome, safe and healthy.

Poultry Diagnosis & Research Institute

With the assistance of US Agency for International Development, K&N’s Poultry Diagnostic

and Research Institute was established in collaboration with Pakistan Agricultural Research

Council. It is a very well equipped and state-of-the-art disease diagnostic, feed and feed raw

material testing laboratory which provides invaluable service to Pakistan’s poultry industry

through research and extension service in close coordination with K&N’s Advisory Service.

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K & N’S COMPITORS AND COMPETITIVE STRATEGY

The very big competitors of k&n is Brazil.

But they are unique because they are giving totally halal slaughter chicken by hand, that is the

plus point for k&n, because as we are Muslim we eat halal food. There first priority is that they

focus on the quality more than them quantity. There prices are higher than the other but they

promise there costumer for giving the best quality make them different from all other , and how

ever they fulfil their promise by giving best to their customers. There sausages are very much

liked by international food chain market.

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K & N’S DISTRIBUTION NETWORK

Delivery Methods from Company to Warehouse and ware house to retailers.

K&Ns maintains 3 Distribution Centers,

 The Northern (Rawalpindi / Islamabad),

 Central (Lahore) &

 Southern Region (Karachi).

DISTRIBUTION OF K & N’s PRODUCTS

After the development of our product our product are distributed into the market for the

satisfaction and attraction of our consumers. Our product plays a vital role in the availability of

our services to attract the customers.

How to Distribute our Product to Retailer

 Sell Directly to Retailers.

 Sell through distributors, which sell a broad range of products to many retailers.

 Sell through captive distributors, which sell a broad range of products to one chain of

retailers. Sell through distributors, which sell to your targeted customers.

 Distribute to K & N’s Stores.

Distribution System & Chicken Stores

Products are stored at -21ºC to maintain freshness. Packed products are moved into K&N’s

sanitized refrigerated trucks for distribution to ensure uncompromising quality control. K&N’s

chicken products are available at K&N’s Chicken Stores and leading retailers and also delivered

to quality and food-safety conscious institutions such as hotels, restaurants, airlines, clubs and

international restaurant chains.

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K & N’s NETWORK DESIGN

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K & N’s FRAMEWORK OF NETWORK DESIGN DECISION

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INVENTORY MANAGEMENT

STORING PROCEDURES

Storing Procedure is as per the International standards laid out by WHO for such products.

Amin-house developed integrated software for inventory management is in place to ensure data

update & First in First out deliveries.

REASONS WHY K & N’s MAINTAIN RAW MATERIAL INVENTORY?

 Most of the K & N’s have raw material inventory warehouses attached to the production

facilities where raw materials, consumables and packing materials are stored and issue

for production on JIT basis. The reasons for holding inventories can vary from case to

case basis.

 Meet variation in Production Demand.

 Cater to Cyclical and Seasonal Demand.

 Economies of Scale in Procurement.

 Take advantage of Price Increase and Quantity Discounts.

 Reduce Transit Cost and Transit Times.

 Long Lead and High demand items need to be held in Inventory.

WAREHOUSE/STORING MANAGEMENT SYSTEM

In K & N’s Supply Chain, Inventory Management and Warehousing/storing form a part of

operations intensive function and is one of the key building blocks in the entire chain. Most of

the inventory is held at the warehouses and storing as compared to the pipeline, and the

efficiency of the warehouse operations will determine the further supply chain efficiency.

A robust WMS capable of managing inventory and locations which is RF driven or enabled,

would be the backbone of a good efficient warehouse.

The Warehouse Management System controls two sets of operations:

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1. On the inventory front, the system maintains inventory in the warehouse at Zone &

individual location level, pallet wise, carton wise and unit level inventories for multiple

customers and allows specific inventory attributes and parameters to be built in to

manage, allocate or block the inventory. The system also provides options to adapt FIFO

method as the products are perishable.

2. On the Operations front the system manages, controls and directs all operations

including receiving processes, put away processes, order processing, inventory allocation,

picking process, packing process and finally shipment along with inventory updating.

The K & N’s intelligent system guides and helps operations manager to schedule and

manage all operations for various groups and teams simultaneously depending upon the

work load and pattern and thereby manage resource allocation too. Supply Chain

Management of K & N’s.

PRACTICES OF KEEPING GOOD INVENTORY MANAGEMENT

Good inventory Management practices in the K & N’s helps by adding value in terms of having

control over and maintaining lean inventory. Inventory at K & N’s stores is not too much or

tools. Both the situations are bad for the K & N’s. Review Inventory periodically and revise

stocking patterns and norms get into detailed inventory planning - One size does not fit all Study

demand pattern, movement patterns and cycles to build suitable inventory norms for different

categories of inventory. The every departments meet with each other in a week and share the

information about inventory like any depart need the inventory or something else. These

meetings control by head of depart and managers.

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SOURCING DECISIONS –1st CROSS FUNCTIONAL DRIVER

BROILER AND OTHER RAW MATERIALS

Almost 90% of the Broilers for processing are produced at K&Ns own Poultry farms located in

the suburbs of Lahore. Broilers of course, are our major raw material. Other than that, many

ingredients & spices are procured from within Pakistan & some ingredients are also imported to

produce the Best Chicken Products for the Health & Happiness of our consumers

K& Ns SUPPLIERS

Under the Supply Chain concept, the suppliers are our Business Partners & long lasting

relationship is maintained in the mutual interest. Accordingly, K&Ns, over the period, has

multiple business partners in the field of Packaging, ingredients & many other fields.

SOURCING STRATEGIES & PROCUREMENT PROCESSES

At K & N’s procurement managers manage procurement and sourcing function both at strategic

and operational levels. They are proactively engaged in building supplier networks, estimating,

controlling and reducing costs besides performing other functions and ensuring service levels.

Their job functions are increasing becoming cross functional together with supply chain and

manufacturing functions.

Procurement Process and Sourcing Strategy

Though interlinked closely, both procurement process and sourcing strategy are not one and

same. K & N’s sourcing strategy deals with planning, designing and building a reliable and

competitive supplier base, determining the strategy for procurement, defining pricing strategies

and supply chain requirements. The strategy involves integration of its objectives in line with or

confirming to the objectives of stake holders in operations, finance, Marketing and distribution &

N’s sourcing strategy also involves planning to competitive buying sources for its raw materials,

components and services along with alternative variables.

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Challenges Faced by K & N’s

 The current challenges that K & N’s is facing in implementing these workflows really

revolve around non-integrated processes and systems with retailers and manufacturers

operating out of their own silo and different planning data. This results in excessive

response times, costs and inventory due to forecast inaccuracy. Retailers on one hand

face stock-outs, material shortages, lost sales and poor customer service to name a few.

 Government restrictions

 Changing rate of dollars

 Higher Import duties of the product.

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CONCLUSION AND RECOMENDATION

CONCLUSION

K&N’s is the leader in the frozen and poultry industry producing high-quality chicken in many

countries around the world and three distribution center in USA, UAE and Pakistan. K&N‟s is

one of a kind in Pakistan and has come forward with a new perspective about frozen food in our

society. K&N‟s has shown sensitivity to the Muslim requirements of halal food products and

introduced its Del Line so that the people have no more doubts and are comfortable consuming

the skinless sausages, cold cuts and smoked meat. This organization has been building on years

of poultry expertise, and a commitment to food-safety, K&N‟s integrated all poultry production

activities under one umbrella to ensure quality and food-safety by managing and controlling all

stages of production.

Recommendations

 K&N’s Should work on their pricing strategy due to which the demand is highly effected

and also follow the integrated growth by introducing beef product line or other product

lines to earn more profit and achieve its targeted sales.

 K&N’s Should Implement SAP or Oracle ERP systems for integration of data between

departments and Distributors or Retailers

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GALLARY

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