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Supply Chain ManagementShangrila Foods Private Ltd

Submitted to Sir Zulfiqar Ahmed Submitted By Muhammad Zakaria (SP14-EX-0047)

Acknowledgement

Firstly we would thank Allah for giving us the opportunity and the resources to be able to do something productive with our lives. Without His blessings we would not have been able to come as far as we have.

Then our sincere thanks to Mr. Arif Aziz (Shangrila) for helping us throughout this report. His guide lines have been very useful for us in preparing this report. He helped us find new ways of being innovative and creative. This report would not have been possible without his cooperation and continuous direction.

Then we would like to extend our thankfulness towards our parents who are our constant supporters, steering us towards achieving our goals.

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Executive Summary

Shangrila has setting up manufacturing plant in 1988for its seasonings; soy and chili sauces. Later in the late 90s, the range was supplemented by Tomato Ketchup.

SHANGRILA (Private) Limited has become a brilliant success story stretched not only throughout the country, but internationally as well, managing four product categories; ketchup, sauces, seasonings, pickles-in-oil under the brand name of SHANGRILA and another brand FRUITI-O drinks

SHANGRILA was among the first few in the food industry to obtain the ISO 9001-2008 Quality Management System & ISO 22000-2005 Food Safety Management System certifications along with HALAL certification from SANAH the South African National Halal Authority. It is also a member of the Association for Dressings & Sauces, USA. Apart from certifications and accreditations, SHANGRILA has consecutively won Brands of the Year Award, Consumer Choice Award and Global Food Safety Award over the years.

SHANGRILA has a strong distribution network in all major towns with more than a hundred distributors nationwide. SHANGRILA has also made inroads in numerous countries across the globe, including markets like USA, Canada, UK, EU, Middle East and Africa. 

Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers.

Shangrila Foods local suppliers are 150plus majority based on Karachi,Lahore, Faisalabad, Hyderabad 60% domestic suppliers at Karachi,25% domestic suppliers at Lahore , 10% domestic suppliers at Khyber Pakhtoon, 5% domestic suppliers at Baluchistan

Store Facility Karachi ware House 35,000 Sq. Feet (Vertical Supplies)Lahore Ware House 32,000 Sq. Feet (Horizontal Supplies)

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Forecasting By Historical Data, Assignment of Target, Market Situations Trends Seasoning Cycles

Inventory Maintenance Raw Materials 20%, Packaging Materials 15%, Necessary Spare parts 5%, Finished Products 20%

CONTENT

1. Introduction ……………………………………………………………………………………………….1

2. Internationally Accredited……………………………………………………………………………2

3. Manufacturing Facilities…………………………………………………………………………….……….4

4. Commitment to Quality…………………………………………………………………………….……….4

5. Exports………………………………………………………………………………………………………

…...……56. Events &

Exhibitions…………………………………………………………………………….……..5

7. Competitors………………………………………………………………………………………….…… 6

8. Supply Chains………………………………………………………………………………………….…..6

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9. Domestic Suppliers……………………………………………………………………………………..8

10. Break Up…………………………………………………………………………………………………... 9

11. Store Facility………………………………………………………………………………………….… 10

12. Channel of Distributions…………………………………………………………………………...10

13. Procurement Procedure……………………………………………………………………………. 11

14. Information System……………………………………………………………………………….…..11

15. Customer flow………………………………………………………………………………………….13

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Introduction

When it all began about 23 years ago, nobody could have even dreamt that such a small company would one day become a leading national food brand. SHANGRILA took over the challenges in domestic markets by setting up a diminutive manufacturing unit in Karachi in 1988 for its seasonings; soy and chili sauces. Later in the late 90s, the range was supplemented by Tomato Ketchup drawing a huge success due to its quality, taste and innovative packaging; initially with the 100g sachet which was a one of its kind pack during that era and later the Stand Alone Aluminum Foil Pack with a nozzle & a screw cap. The 100g pack managed to wedge through consumers in developing the ketchup market among the masses, while 1Kg SAP catered to economy. Early in 2000s, SHANGRILA enhanced its portfolio with Pickles-in-oil in Stand Alone Pouches for the first time in the history of commercially produced pickles, and this resulted in a steep vertical ascent in the brand’s growth in the following years. Continuous product and packaging innovations, besides advancement of the supply chain process, removal of bottlenecks, and modernization of manufacturing facility with European technology cruised SHANGRILA ahead of the competition. SHANGRILA has been persistently taking on the tough situation in the industry, and has managed to create depth, as well as width for itself, moving at a pace faster than its rivals. With a phenomenal multifold-fold rise, SHANGRILA (Private) Limited has become a brilliant success story stretched not only throughout the country, but internationally as well, managing four product categories; ketchup, sauces, seasonings, pickles-in-oil under the brand name of SHANGRILA and another brand FRUITI-O drinks.

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Internationally AccreditedTo increase the acceptability of SHANGRILA products locally and globally, the company has taken the lead in implementing the industry’s best manufacturing practices and obtaining internationally acclaimed certifications. SHANGRILA was among the first few in the food industry to obtain the ISO 9001-2008 Quality Management System & ISO 22000-2005 Food Safety Management System certifications along with HALAL certification from SANAH the South African National Halal Authority. It is also a member of the Association for Dressings & Sauces, USA. Apart from certifications and accreditations, SHANGRILA has consecutively won Brands of the Year Award, Consumer Choice Award and Global Food Safety Award over the years.

Global FootprintsSHANGRILA has a strong distribution network in all major towns with more than a hundred distributors nationwide. SHANGRILA has also made inroads in numerous countries across the globe, including markets like USA, Canada, UK, EU, Middle East and Africa. 

Prospering Like Never BeforeWith SHANGRILA spreading wings all over the globe, acquiring key markets & strategically developing new products, there was a corporate

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need felt to identify with a wider scope .The company started working on new food related projects & products. All this has led to strategic realignment of resources & focus giving birth to a new brand FRUITI-O drinks. Tradition to look Beyond Reaching new heights and breaking newer grounds is something that’s regarded as the motto of work at SHANGRILA. Today, fully geared with an undying passion for success, SHANGRILA is fueled by the dynamic drive that has shaped its yesterday, fascinated its today and tomorrow. The company’s inner spirit is one of motivator; participative culture and constant strive for inspiring targets and new initiatives to broad – base our products’ portfolio. This ambitious spirit is reflected in the aggressive, non-compromising growth the brand has achieved nationwide. Targeting high growth in terms of revenues over the years in the domestic market, there has been a quantum increase in both distribution and sales. 

Passion towards Corporate Brand BuildingSHANGRILA is the leader in producing nutritious, innovative, halal and tayyab food products within its categories, and since long, it enjoys nationally acknowledged patronage. SHANGRILA, as a brand, appreciates every honor it receives, and works hard to ensure that its award-winning standards remain high, but there’s nothing quite like being recognized as a good, fair place to work at. As a company it treats its employees and community with the respect and gratitude they deserve.

Corporate PhilosophyAt Shangrila, we believe that our organization is responsible to our Creator, our people and our business partners. We continuously aim to satisfy our customers and consumes by providing them Halal, Tayyab/Hygienic, Nutritious, and Convenient food that are produced with international quality standards, through continuous research and development, to give best value for their money, through a customer driven and service oriented dynamic team. We pledge to contribute to the betterment of environment and culture in communities where we produce and distribute out product.

Accreditations & Awards ISO 22000:2005 (Food Safety Management System) ISO 9001:2008 (Quality Management System) SANHA (South African National Halal Authority) ADS (Association for Dressings & Sauces, USA)

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PSQCA (Pakistan Standards and Quality Control Authority) Consumer Choice Award – 2005 to 2008 & 2013 (Consumer Association of Pakistan) Brand of the Year Award – 2008 to 2012 (Brands Foundation of Pakistan) Global Food Safety Award (Global Media Links) PLMA (Private Label Manufacturer Association)

Manufacturing FacilitiesShangrila has always strived to deliver the best to its customers with an insatiable quest for premium quality. Our priorities are to produce quality food, in compliance with the international standards regarding food safety. Our success across the globe is an affirmation of the quality standards that are maintained for each of our product range. The innovation in product lines, recipes and tastes that Shangrila has been consistently able to deliver, are a result of the continuous in-house research and development.

The experienced manufacturing experts and quality assurance team ensure that every product unit is of the highest and consistent standard. The acceptance of our products by major international and country specific food grading and clearance authorities itself speaks for the universal food quality and packaging standards that we maintain.

At Shangrila, we do our best to satisfy our clients. Top quality management procedures are thoroughly implemented in order to match global standards. With investment in latest technology, Shangrila has fully automated plants for its ketchup & Juice brands. With minimal human interaction, both ketchup and juices are produced and packed using state-of-the-art technology.

Commitment to QualityPursuing the quest for continuous improvement, Shangrila ensures the efficient implementation of ISO 9001:2008 Quality Management System & ISO 22000:2005 Food Safety Management System, incorporating HACCP and GMP. We are constantly investing in acquiring advanced measurement resources and modern manufacturing equipments which are supported by fully equipped Chemistry & Microbiology Analytical Laboratories. Validation is also done through continuous audit process of our integrated management system according to the international standards.

Our products have been tested and approved by following international authorities

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FDA (Food and Drug Administration), USA SASO (Saudi Arabian Standards Organization), KSA Ministry of Health, UAE Ministry of Health, Qatar Ministry of Health, Kuwait AQIS (Australian Quarantine Inspection Services), Australia BSTI (Bangladesh Standard Testing Institute), Bangladesh NAFDAC, Nigeria PSQCA (Pakistan Standards and Quality Control Authority) CFIA (Canadian Food Inspection Agency) Food Standard Agency UK Norwegian Food Safety Authority Norway

ExportsAt Shangrila, exports have an important focus. For this purpose, aggressive channels of supply chain are working for Shangrila in various international markets. Our Products have a special appeal for the halal conscious consumer segments around the world.

Shangrila identifies the consumers’ specific demands for religious compliance, hygiene, nutrition, taste and convenience on market to market basis. The demanded products are accordingly made available in the respective markets thus generating a huge response from the consumers. Shangrila is all set to explore new markets, identifying specific consumer needs and providing much desired Shangrila products on the market shelves, Insha-Allah!

Private LabelingOther than our premium brand Shangrila, we also extend our services by offering our customers private branding opportunities in the increasing global market. Maintaining highest manufacturing standards, authenticated sourcing, state-of-the-art manufacturing facility and a long professional experience, we offer contract manufacturing and private labeling & facilitate the interested customers to the best of their requirements. A wide array of services and service options have proven to be the primary reason why customers have chosen Shangrila (Private) Limited to fulfill their production needs. Shangrila is well versed in handling glass, PET and convenient flexible packaging (stand alone pouches) with a wide variety of filling/bottling, capping, labeling and packaging options. Our strengths include

Understanding customer need Quality manufacturing facility

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Minimum production volumes Wide variety of options Flexibility Over 20 years of experience

Events & ExhibitionsInternational Events

Gulfood – Dubai, UAE Anuga – Cologne, GERMANY SIAL – Paris, FRANCE PLMA (World of Private Label)

Local Events Dawn Life Style My Karachi Kids Expo Expo Pakistan

Competitors Knorr Ketchup

Mitchells Ketchup

National Ketchup

Ahmed Tomato Ketchup

Shangrila Ketchup

Nauras Tomato Ketchup

Tops Tomato Ketchup

Dawn Tomato Ketchup

Qarshi Tomato Ketchup

Pickles and Sauces

Shan Foods

National Foods

English Foods

Unbranded etc

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Supply Chains

Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. Supply chain comprises of all the activities necessary for making and delivering the product to consumers. A basic model of supply chain can be seen in the following diagram. They have several confidential suppliers which are providing quality standard raw materials.

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SourcingInternational Suppliers (Raw Materials) China

Heinz (Qingdao) Food Co Ltd China

Product Benefits: 1 One global recipe. The Subtle blend of spices used to make Heinz Tomato ketchup has remained a secret for over 130 years 2 Well selected Red ripe tomatoes as materials; One bottle of ketchup contains at least 6 Red ripe tomatoes 3 Very balance of sweet and sour taste, freshness, and natural 4 Super hot break production techniques, keep

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Efficiency Responsiveness

Inventory Transportation Facilities Information

original and fresh tomato flavor and texture 5 100% crude ingredients, no preservative, thickeners, artificial essence or coloring

Efficient & Responsiveness

Domestic Suppliers

Shangrila Foods local suppliers are 150 plus majority based on Karachi,Lahore, Faisalabad, Hyderabad

60% domestic suppliers at Karachi25% domestic suppliers at Lahore 10% domestic suppliers at Khyber Pakhtoon5% domestic suppliers at Baluchistan

Oracle SoftwareSome features of oracle software in their research and development.

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Break Up

Packaging 10 Suppliers are based on Karachi and Lahore

Pulping5 Suppliers based on Karachi, Faisalabad and Hyderabad

Engineering and Spare Parts 30 Suppliers are based on Karachi and Lahore

Miscellaneous Items 100 Major suppliers based on Karachi and Lahore

Sugar 5 Factories through single broker

Logistics Through third party yearly Contract based Currently three contractual transporters are working

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Company has more than hundred vehicles to convey their finished goods to retailers and distributors.

Transportation mode is good due to high quality infrastructure. All distributors are responsible for transportation. For international delivery company used container from

manufacturing unit to Karachi port For local delivery company used trucks and containers.

Store Facility Karachi ware House 35,000 Sq Feet (Vertical Supplies)Lahore Ware House 32,000 Sq Feet (Horizontal Supplies)

Forecasting By Historical Data Assignment of Target Market SituationsTrends Seasoning Cycles

DurationYearly Six Monthly (Semi Annually)QuarterlyMonthly

ProcessEvery Month get the sales target and Coordinate with production department Final data will put on MRP Arrangement of Supplies through concern Suppliers

Channel of Distributions All over Pakistan

Direct DistributionCompany used direct distribution

Metro Hyper star Al-Fateh Imtiaz Super Market Naheed Super Market Chase Up

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Shaz Super Market etc

Indirect DistributionDistributors are responsible for other retailers 5 DistributorsLahore and Karachi

Recently Launched ProductsHot and Spicy KetchupGreen Chili Sauce

Procurement Procedure

Sales Forecast Material Requirement Planning System Generated Purchase Requisition Quotation (If required) from exist Supplier otherwise search the

vendor and rate Approval of quotation with terms and condition including lead time

etc Purchase Order Follow up on Supplier Arrival goods Inspection by Quality Assurance Department If Consignment Fails return to Supplier If consignment Pass then Shift to RM Store, Consumable Store, POS

Store, Engineering Store and Cold Storage Issuance of Materials according to procedure of requirements

Information SystemThe use of information systems has become increasingly important in today's world. Companies need to have the best set of information systems and professional to fully benefit from it. A good information system can provide company with a competitive advantage. Shangrila currently uses software like excel, SPSS and some features of oracle software in their research and development. Apart from this they have a computerized system for their inventory control and production handling.

Inventory Maintenance Raw Materials 20%Packaging Materials 15%Necessary Spear parts 5%

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Finished Products 20%

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Customer flow

Key Performance Indicator

Inventory Turnover Carrying Cost of Inventory  Order Tracking Inventory to Sales Ratio

Rate of Return Order Status Inventory Accuracy Perfect Order Rate

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Conclusion Supply chain of Shangrila company is very good because they have hundreds

of vehicles for delivery their product

They have efficient supply chain strategy.

They produced tomatoes from different farms. So the quality of ketchup is very high

They have very fast information system so due to good information system they could manage their inventory of raw material very good manners

According to our analysis Shangrila have a very good and efficient supply chain.

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