supply chain model of ali gohar & company

Final Project Report

Supply Chain ManagementCourse Facilitator: Sir Ibtihaj Abbas Khan

Program: MBA (E)Class: Sunday (12:15 to 03:15)Student: Javed Ameen : 1049Rizwan Alam Siddiqui : 5502

Muhammad Ramish khan : 2399Waqas Zakir : 2515

Muhammad Hashim abbasi : 2259Muhammad Naveed Ashraf : 1048

Table of Contents:Acknowledgement...............................................................................................................................5

Introduction.........................................................................................................................................6

Vision...................................................................................................................................................6

Core Values..........................................................................................................................................6

Business Model....................................................................................................................................7

Distribution:.....................................................................................................................................7

Key Resources..................................................................................................................................7

Channels..........................................................................................................................................7

Cost Structure..................................................................................................................................7

Revenue Streams.............................................................................................................................7

Distribution Network...........................................................................................................................8

Key Strengths.......................................................................................................................................8

Competitive Strategy...........................................................................................................................8

Competitors.....................................................................................................................................8

PEST Analysis.......................................................................................................................................9

Economic factors.................................................................................................................................9

Political factors....................................................................................................................................9

Social factors.......................................................................................................................................9

Technological factors...........................................................................................................................9

PORTER’s Five Forces...........................................................................................................................9

Bargaining Power of Suppliers:............................................................................................................9

Buyers’ power for Bargaining:.............................................................................................................9

Threat of New Contestant:................................................................................................................10

Substitutes Availability:.....................................................................................................................10

Rivalry with competitors:...................................................................................................................10

Supply Chain Process..........................................................................................................................10

Key Points;.........................................................................................................................................10

Product Line.........................................................................................................................................11

Pharma..........................................................................................................................................11

Surgical and Instrumentation........................................................................................................11

FMCG.............................................................................................................................................11

LOGISTICS SYSTEM................................................................................................................................11

Inbound logistic:........................................................................................................................11

Outbound Logistic:.....................................................................................................................12

Tools......................................................................................................................................................12

Software.................................................................................................................................12

Transport...............................................................................................................................12

• Warehouse............................................................................................................................12

Supply Chain Model Illustration.............................................................................................................13

Inbound.............................................................................................................................................14

Outbound..........................................................................................................................................14

Phases of Supply Chain Model..........................................................................................................15

1st Stage:.......................................................................................................................................15

2nd Stage:......................................................................................................................................15

3rd Stage:.......................................................................................................................................15

4th Stage:.......................................................................................................................................15

5th Stage:.......................................................................................................................................16

Visiting Ali Gohar & Company................................................................................................................17

Conclusion.........................................................................................................................................18

References.........................................................................................................................................18

Supply Chain ManagementFinal Project

Course Facilitator: Sir Ibtihaj Abbas Khan Iqra University (North Nzd Campus)

ACKNOWLEDGEMENTThe purpose of this report is to after selecting a company; understand their Supply Chain

Mechanism to know the practices in the industry.

This report is a result of continuous supervision, cooperation and inputs of followings; and we

are thankful to them from our heart;

The almighty Allah who always guide us to the right way

To our beloved and intelligent advisor Sir Ibtihaj Abbas Khan who share his knowledge

and ideas during classes; and encourage us to meet the necessary efforts in completion

of our report

To my team members who gave a combine efforts and offered their valuable time for

completing this report on the dot

To personnel of Ali Gohar & Co. specially Mr. Zaeem Bari (Supply Chain Manager), Mr.

Zaid Ahmed Siggiqui (Business Unit Manager – FMCG Division), Mr. Muhammad

Ramish Khan (Supply Chain Officer), Mr. Rehan Hassan (Software Developer) and Mr.

Johnson Rehmat who given their thoughts during our meeting at office of their

company

of 21 Javed Ameen : 1049 :: Rizwan Alam Siddiqui : 5502 :: Muhammad Ramish Khan : 2399Waqas Zakir : 2515 :: Muhammad Hashim abbasi : 2259 :: Muhammad Naveed Ashraf : 1048



INTRODUCTIONAli Gohar & Co. is incorporated in Pakistan in year 1968 as Private Limited Company, a one-stop company involved in distribution of Surgical & Instruments, pharmaceutical products, and FMCGs in Pakistan. They are one of the largest distribution system for pharmaceutical products in Pakistan. The success of Ali Gohar& Co. is in their strong and organized infrastructure which helps to provide safe and sound services to wholesale outlets, retailers, clinics, doctors and hospitals in whole over the country. Ali Gohar and Co. has new technology of storing and refrigeration all type of sensitive temperature products in the warehouse and in delivering. Their success boost due to continuously changing of business models according to requirements of their clients’ demands. Some other qualifications and expertise of Ali Gohar& Co. are as below,

More than 60 years of experience in marketing and distribution. Has centralize MIS system Safety and Quality programs in one place Delivery operation and warehousing proper system Has ability to customized services of delivery for all products anywhere.

Ali Gohar& Co. has strongest connection and links with their suppliers, distribution mechanism and wholesalers. They has good repo in providing smooth process of supply chain and in providing facilities of storage handling and delivery of healthcare products, FMCGs and pharmaceuticals products. AG & C has 15 branches which are located at Karachi, Rawalpindi and Peshawar .Gujranwala, Quetta, Multan, Sukkur, Hyderabad, Lahore, and Faisalabad.

Ali Gohar & Co. has head office in Karachi, located at State Life Building 1-B, I. I. Chundrigar Road and has well designed HR and departmental mechanism to serve better and improve the clients’ experience. Their CEO is Mr. Arshad Gohar. They credit rating with JCR who give rating A-/A-2 in year 2014 with Stable Outlook.

Vision

Core Values




BUSINESS MODELAGC is a distribution firm who serves as a distributor in market and affiliated with different principles having own their agencies in Pakistan for supply and distribute their goods to all over the Pakistan. The business model of AG & Co. is mentioned below,

Key Partners Key Activities Value Propositions Customer Relationship

Customer Segments

AGP Pharma Cheisi Pharma Alcon Pharma Roche Pharma ELI-Lilly Pharma 3M Pharma Master Pharma Alcon Surgical B'Braun Zimmer Smith Medical Covidean L'OREAL Mehran Spices Nestle (Nescaffe

Dolce Gusto) New Launch in Pakistan

Distribution:Improving access to offered products towards the customers / retailers / wholesalers

Printing and packaging of pharmaceutical products. And gives value to the corporate clients

Deliver save and sound quality products to the customers.

Just in Time delivery also available

WholesalersRetailersSub

DistributionsSalons (for

L’oreal)

Key Resources

People of AG & CoFinancial resourcesStrategic PrioritiesPartnershipsThe expertiseThe values

Channels

TCSMTN TransportsJan Sarhad

TransportsTS Transports

services (cold refill containers)

Cost Structure

Transportation Packaging & printing Clearing & Forwarding agencies

Revenue Streams

Product Sales & deliver




Distribution NetworkAG & Co. has 15 branches all over the Pakistan .The warehouse is located in Karachi at SITE area. The head office is in Karachi located on state life building, Karachi

Key Strengths

AG & CO. has Highly professional distribution channel Emphasis on employees motivation and skills Has experienced and qualified employees and sales force Focus on customer need and try to fulfill their demand on time Continuously improvement in IT and distribution channel Has good relationship with key partners Shared and Clear vision, goals, objectives and Policies. Main focus to short term objectives and planning for Long Term Goals. One Window Operation and nationwide coverage

COMPETITIVE STRATEGYCompetitors

Muller & Phipps Abu-Dawood Burque Corporation UDL Distribution Pvt Limited Premier Agencies

Competitive strategies are the set of methods used to gain competitive advantage among competitor companies. The satisfaction of customer and their trust is main goal of Ali Gohar & Co, and for this the company always tries to ensure products delivery as per clients’ preference. For the betterment in service quality, the entire staff make sure to keep healthy, communicated, and cooperative working environment. Time to time they change their technology, tools, techniques and quality to maintain their position in market. They also improve their working, procedures as per requirement or needs of their customers. For better trust level the company ensures to be transparent to their clients.

The largest variety of cosmetics, pharmaceutical and surgical instruments make AGC different from others. The distribution charges of AGC is very competitive than others. AGC order bookers are equipped PDT (RFID ) which help at the time of order booking and easily accurate communicate to concern branch regarding customer requirement. They are using GPS and GPRS technology to keep monitoring the delivery during long route carriage, until consignment reaches its designated destination. The order booking confirmation and delivery information are work on real time basis for information flow with each stakeholders.




PEST ANALYSIS Economic factors

Political factors

Social factors

Technological factors

PORTER’S FIVE FORCESBargaining Power of Suppliers:

While supplier’s bargaining authority is limited as the prices are well known, if require AGC can apply charging higher prices, can adjust product quality or affect availability and can reschedule timelines of delivery.

AGC has strong network of distribution and wholesalers in Pakistan. Being a very experienced company they can affect the competitive environment and can directly manipulate profitability for the company.


1. Health and safety2. Population growth rate3. Division of wealth in society4. Age distribution5. Career attitudes

1. Inflation rate2. Interest rates3. Exchange rates4. Taxation5. Economic growth or state of the economy

1. R and D activity2. Automation3. Technology incentives4. Innovation5. Recent technological developments

1. Tax law2. Trade restrictions and tariffs3. Employment Law4. Political Stability5. Environmental regulations



Buyers’ power for Bargaining: There is no direct link with the end consumer so they have a link with the wholesalers and

retailers who sell their products to the end user and consumers. There are big popular companies of distribution are available in the market. Bargaining power of buyers are high.

Threat of New Contestant: Huge investment is there so less chances of new entrants. Capital investment is very huge in the distribution industry. Well established distribution companies like Muller and Phipps, Abu Dawood, Burque already

exist in the market. Threat of new entrant is very low.

Substitutes Availability: Faces direct competition from the distribution sector. Reasons for choosing another company by wholesalers and retailers may be relative quality of

the product is higher, switching cost is lower. Threat of substitute is high because wholesalers and retailers purchase in bulk quantities.

Rivalry with competitors: Price, quality of the product plays an important role for rivalry among competitors. Method adopted to attract wholesalers and distributors are discounts and promotions. Rivalries among sellers are high. Competition mainly based on price differentiation. For change in prices need to follow regulatory regulations and government approval. Although AGC and Co has strong competitors in the market as Burque and Muller and Phipps

where they are distributing products in the market on credit but AGC products has a competitive edge on all these distribution companies and no one can compete in the market due to strong market share, strong supply chain network.

SUPPLY CHAIN PROCESSThe core strategy of AGC is based on their supply chain process. Mainly they are using FiFo inventory system due to nature of products they are handling.

Key Points; In Asia, the logistic infrastructure of AGC is largest and most comprehensive With 180 distribution centers, they distributes above 300,000 consumer products of above

5,500 vendors to satisfy their customers who are above 550,000 They possess one big warehouse; while also facilitating with logistic services by third party Their healthcare distribution centers (total 15) are state-of-the-art GMP-compliant




PRODUCT LINEProduct Total Companies Profit

Pharma 7 9%

Surgical & Instruments 5 20%

FMCG 3 11%

PharmaAGC has some sort of contracts for the sort of distribution with many pharma companies which they have got much reputable position in Pakistan market. The main segments of products are health care, pharma, over-the-counter (OTC), medical and medical devices. The Eli-Lilly pharma company has only the one company who provide the insulin for sugar patients, also the Switzerland company Covidien only the company who provide ventilator products, there is many varieties of different pharma companies like Roche, B Braun and Chiesi pharma.

Surgical and InstrumentationThere are many companies who provide surgical instruments in hospitals which are using in different surgeries. The American company Zimmer who provide only the accidental accessories also the Switzerland company Alcon they has various variety in Eyes surgeries and ultrasonic machines which they offer to different hospitals through marketing.

FMCGThe uniqueness of AGC who differentiate for their competitors is their FMCG range. Nestle is one of the companies who use AGC distribution in Coffee range. The quality and safety standard would be measured to provide the hygienic environment to eatable products. Mehran spices is also the name who won their end consumer trust in very short time to provide the right thing on right time towards their customers with the help of AGC. The USP of AGC is L'Oréal, the company who has various cosmetics products which is acquire by many Bollywood and Hollywood actor and actress.

LOGISTICS SYSTEM AG & Co. uses MIS logistic information system which indicates the availability of stocks in warehouse, branches and in transit stock. It’s also indicates the total sales in term of unit and cost. AG & Co. use both 3rd party and own logistic system.

Inbound logistic:AG & Co. purchases finished goods different strategic partners or principals from local as well as foreign supplier. Finished goods which received by Sea, by air and by road, mainly stored at




main warehouse. The stock provide in main CWH (Central Warehouse) with help of logistics who provide by freight forwarder. After that stock would be receive in CWH with the help of picking list and after physical checking the stock has been entertain in system through SRR (Stock receiving Report) in MIS.

Outbound Logistic:In outbound; stored finished good passes through checking of quality standards process. And in last stock replenish towards the branches through 3rd party logistic system through STF (Stock Transfer Form). The branches receive through SRR (Stock receiving report).Then branches deliver the goods to retailer / wholesalers as per their demand through its own logistic system.

TOOLS Software: AG & Company’s head office integrated through MIS and BOS for Branches and

main warehouse. The company offering the facility to their corporate customers by authorizing in access to their online software so that they can able to analyze and monitor the current position of their products that where is the actual position of product and which it will be reached at destination and make reports according to it. Because of that services clients can able to easily analyze their products as per various categories like forecasting of sales, demand fulfillments, sales analysis etc and in 2016 Ali Gohar& CO. is going to introduce ERP ( Oracle ) coming year. AGC is currently using JD Edwards’s enterprise application for their financial and inventory management system. The JD Edwards’s enterprise application is well accepted and renowned. The SAP WHM enable their operation more standardized and trustful.

Transport: AG & CO. has its own 60 Shehzore trucks for delivering finish good from branches to Retailer / Wholesalers. Each branch has 4 trucks to deliver goods to clients. The third party logistics are also in regular practice.

• Warehouse: AG & Co. has massive 12,000 square feet warehouse at SITE Karachi. And has different portions and section as per product requirements. Has capacity of 2000 euro pallets and designed in a way that pallets are easily can move and handle. They are also offering contract warehouse management.

Proper warehouse management process ensures to keep all the goods as per required conditions. They also have refrigeration facility to store and save goods for long period and make sure to deliver product to its consumer in right condition and the following activities are done at AGC warehouse,

1. Received stock and checking against picking list 2. Physical inspection of Stock in term of quality and quantity




3. Report to insurance company regarding damages & shortages4. The segregation the goods processed on the basis of its SKU’s.5. The goods are allocated at warehouse and accordingly stored.6. The selection of product done once delivery require and finally dispatch process starts7. The system of inventory updated accordingly

SUPPLY CHAIN MODEL ILLUSTRATION




Inbound

Outbound




PHASES OF SUPPLY CHAIN MODEL1st Stage: At first stage our customers (Retailers, wholesalers, Hospitals & Clinics) place order as per demand arise from consumers and sales forecasting. The order usually place at AGC branches through sales person who visit at client premises, or via phone and via email. The Push system is followed at this stage between our customers (Retailers, wholesalers, Hospitals & Clinics) and consumers.

2nd Stage: After collecting orders from customer all the branch give specific delivery time to customer according to product, if stock is not available in branch so branches intimate to Head office (supply chain department) through MIS or email to fulfill the customer requirements.

3rd Stage: If is there any excess stock available to nearer branch so supply chain department arrange inter branch transfer otherwise stock deliver from main warehouse. AG & C usually replenishments the stock on weekly basis as per sales trend of branches, to maintain the proper stock level in branches and warehouse as well.

4th Stage: As per customer demand or forecast AG & C issue purchase order to local / foreign manufacturer to fulfill or maintain the need of customers. After that manufacturer send order confirmation about available product. AG & Co. send LC (letter of credit) or BG (Bank guarantee) to manufacturer for sending the good according to purchase order via sea freight, air freight and road (local manufacturer).




5th Stage: after clearance of good at port freight forwarder dispatched the goods to main warehouse through own logistic system. Then Stock moves toward branches as per need through 3rd party logistic system. In last by using own logistic system Branches deliver the goods to customer in lead time.




VISITING ALI GOHAR & COMPANY




CONCLUSIONAli Gohar & Co. is experienced, well equipped company who has trust of their suppliers and customers (wholesalers, distributers). The reputation of the company is good and as we meet with three persons of the Supply Chain team of Ali Gohar, we found them well knowledgeable and market focused. It shows the commitment to serve the clients with market facts, individual attention, and analysis based services. While they has variety of items in all three categories; all these categories are strong and normally not are seasonal so their business is at strong stage. Having good names on their panel (Like Eli-Lilly pharma, Roche Pharma, American company Zimmer, Nestle etc) make them reputable name in their field.

The I.T. setup is working good to serve the activities of AGC however during meeting; their personnel informed that they are also going to implement new MIS software which will improve working especially in inbound logistics. The SAP WHM helping in handling services of their massive warehouse.

Being old, well communicated, with quality relationship strategy they are maintaining their market position. This industry needs much investment (to have state-of-art warehouse and massive distribution network), well organized HR and Supply Chain system so new entry of rival will be difficult. The throughout continuous improvement and changes as per market demand, make every company valuable and thus Ali Gohar & Co. is following this golden rule. The AGC is equipped with distribution and technical support, strong capabilities in marketing, and has strong and long term relationships in the industry. Their supply chain team has separate consultants, market analysts, advisors, and as well as business developers to serve in broad spectrum.

REFERENCESMr. Zaeem BariSupply Chain Manager

Mr. Zaid Ahmed SiggiquiBusiness Unit Manager – FMCG Division

Mr. Johnson RehmatI. T. Officer

Mr. Muhammad Ramish KhanSupply Chain Officer

Mr. Rehan HassanSoftware Developer




Website: http://www.aligohar.com/


http://www.aligohar.com/

supply chain model of ali gohar & company

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