Project of Supply Chain Management Sayyed Engineering Private Limited

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  PROJECT OF SUPPLY CHAIN MANAGEMENT SAYYED ENGINEERING PRIVATE LIMITED Introduction: Objective(s) of the project: The objective of this project is to outline the overall flaws in the Supply Chain of Sayyed Engineering Private Limited and suggest the ways in which these flaws can be over come and the supply chain can be improved. Company introduction:   Sayyed engineering ltd was the first to manufacture the ballpoint pens in South  Asia in an era when such high quality precise engineering, involved in the production of tips of ball point pens, was considered to be possible only in the advanced countries. Since its foundation in1967, the company has sustained its devotion to high quality and innovative products.    Apart from Pakistan, it has also been exporting its quality products to many countries, including UAE, Jordan, Iraq, Egypt, Madagascar, Holland, Morocco, and Saudi Arabia. Product lines: The Company basically deals in following product lines:   Stick Pens   Retractable Pens   Gel and Roller Pens   Fine Liners   Fountain Pens   Liquid Ink Pens   Fibber Tip Pens   Markers   Pencils   Sharpeners Quality Certifications:     Best machines and raw material from Germany, Switzerland, and Japan are used to injection mould the ballpoint pens and produce the refills.  Comprehensive quality control systems have been established, which have earned the ISO 9002 certification to the company. Production facilities:  The company has three production facilities located at 1. Gujranwala, 2. Sargodha 3. Bhai Pheru Regional offices: The regional offices of the company are located in 1.   Lahore 2. Rawalpindi 3. Karachi 4. Overseas office at Jebel Ali, UAE. Many other offices working under the three regional offices in Pakistan, which are striving day and night for customer satisfaction, quality improvement, innovation and capturing new markets for the company. Introduction of Problem Area:   The supply chain of Sayyed Engineering Limited is centralized, and there is a lack of coordination between strategic and operational level   Lack of appropriate vendor database system   No opportunities for potential new vendors   Lack of company owned transportation and reliance on Transportation Company    Lack of company’ s warehouse and stores   Lack of distribution network and agencies   Lack of coordination between different departments   Lack of training and skills in employees to properly manage the ERP system installed by the company Problem Background: The problems stated above basically srcinate due to autocratic style of strategic level management, their risk-averse attitude and lack of coordination among the departments. Management has stuck itself with its traditional old strategies, suppliers and systems, and is reluctant to seek the new possible horizons.  Company does not give chance to new local suppliers, who even offer raw material at lower rate, just due to the reason that they do not want to compromise on quality. To enjoy the advantages of tax savings given by the government in industrial zones like the other companies in the Industry, company has formed its production facilities in industrial areas. But this has increased the transportation expenses between regional offices and production facilities. Logistics is the back-bone of any Supply Chain. Company is hesitant to invest in buying its own vehicles and waste time and money on their management and maintenance. Looking at the Pakistan’s rising fue l prices, it is very clear that the freight charged by the transporters must be very high and company still has to pay it. Due to its cost saving attitude, management has not rented or bought any ware-house, due to which it does not has any place to store its inventory and keeps it in its head-office till delivery. Now-a-days market believes in swift orders and supplies, and to meet this requirement stock need to be kept in a warehouse. Company has always believed in hiring professional and skilled staff, but is unaware of the fact that every person needs to be updated through continuous professional development and training. Problem Analysis: During a meeting with company manager, he told that the ultimate users of budgets and systems were given least importance during their formulation. He told that higher management only believes in giving fix targets but do not look at the volatile economy of Pakistan.  As per the information provided by him, it is very clear that many of their targets become unrealistic at some time during the year, which not only de-motivates the operational level managers but also the sales and marketing staff. Top management is very less aware of the limitations and problems faced by the operational core when they do not give them chance to be a part of decision making process because at the end they are the ones to achieve the targets and plans.  Further when he was asked about the logistics system of the company, he told that company is totally reliant on external transporters and has no vehicle of its own.  As per his comments and looking at the remote locations and distances between the production facilities and regional offices, it is visible that how the transportation and freight expenses would be a burden on the cash flows and profitability of the company. Also, in-case of any strike by transporters or further rise in fuel prices (as is the current trend in economy), the logistics system of company may collapse. It was found out that company is totally reliant on foreign suppliers for raw materials, and least interested in looking for potential local suppliers, to maintain the quality of products and also to maintain the ISO 9002 certifications. This results in high cost of raw materials, leading to high cost of production. Due to foreign transactions, the exchange rate fluctuations also highly affect the budgeted costs. During a search about supply chain system of the company on the internet, it was found that the company does not have its own warehouse to store the inventory. This is a great issue, still un-addressed by the management. Finished goods are kept in head office till delivery, due to absence of ware house. Company has no inventory kept to meet any immediate orders, due to which many possible customers are lost. Also it causes high pressure on production department for quick production, and haste may cause many quality flaws in products. When company manager was asked about the distribution network of the company, it was deduced that, goods are transported to distributors, who transfer them to the retailers and stationary shops who sell them to consumers. Another track is that some big organization buys directly from company. So they are highly reliant on external distributors for their distribution and do not have their own distribution agency which leads to a fear that the distributors may switch to a competitors at any time, rendering the distribution system totally failed. This failure will lead to loss of customers and goodwill of the company.  Another problem realised when observing the information system of company was the lack of co-ordination between production, procurement and marketing
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