production and operation management report
TRANSCRIPT
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TABLE OF CONTENTS
LETTER OF ACKNOWLEDGEMENT........................................................................... 4LETTER OF TRANSMITTAL....................................................................................... 5EXECUTIVE SUMMARY............................................................................................ 7THE GROUP IN BRIEF............................................................................................... 8STRUCTURE ............................................................................................................. 8VISION ..................................................................................................................... 9HISTORY ................................................................................................................ 10ICIIN PAKISTAN................................................................................................... 13MISSION STATEMENT............................................................................................ 15SWOTANALYSIS .................................................................................................. 15INTRODUCTION TO PAINT INDUSTRY..................................................................... 17ICIDULUX-THE MARKET LEADER....................................................................... 18CORE COMPETENCIES............................................................................................ 18PRODUCTION......................................................................................................... 20
PRODUCT LINEPRODUCT RANGEWATER BASED PAINTSOLVENT BASED PAINT
PRODUCTION PROCESS.......................................................................................... 21
DISPERSION SECTIONMIXING SECTIONCOLOR MATCH &QUALITY CONTROL SECTIONFILLING SECTIONERROR!BOOKMARK NOT DEFINED.
CAPACITY .............................................................................................................. 25FORECASTING ........................................................................................................ 25
QUALITATIVE APPROACHERROR!BOOKMARK NOT DEFINED.QUANTITATIVE APPROACHDEMAND PATTERN
INVENTORY &MATERIAL MANAGEMENT............................................................. 26USE OF INVENTORYTYPES OF INVENTORYINVENTORY MANAGEMENT AT ICIINVENTORY CONTROL &RECORDS IN ICIINVENTORY INSPECTIONRELATIONSHIP WITH SUPPLIER
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PROCUREMENT DEPARTMENT............................................................................... 28
DISTRIBUTION SYSTEM.......................................................................................... 30TOTAL QUALITY MANAGEMENT............................................................................ 30ISOCERTIFICATIONS............................................................................................. 32ISO9000ERROR!BOOKMARK NOT DEFINED.
ISO9001ISO14001MRP2CLASS A
CONCLUSION ......................................................................................................... 35
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EXECUTIVE SUMMARY
This report covers the production and operations management system of the ICI PakistanLtd. This report covers the production process, procurement and distribution strategy,core competencies, inventory management, total quality management and forecastingmethods and practices of ICI Pakistan Ltd. The findings of the research have beensummarized in the conclusion section on the analysis of the whole operationsmanagement system of ICI Pakistan Ltd.
ICI started operation in Pakistan 1964, its manufacturing plant for paints Business
situated at 346 Ferozepur Road, Lahore. Now, they have corporate offices, regionaloffices and warehouses in almost every district of Pakistan. The plant operates at worldstandards of safety, environmental care, product quality and process efficiency.
ICI is the market leader in the Paint Industry of Pakistan as well as a renowned name inthe pharmaceutical industry but the company also maintains its competitive edge byvirtue of being a local manufacturer and major supplier for the domestic Polyester fiberand Terephthalic Acid (PTA) to industries with short delivery, consistent quality andexcellent customer service.
Purified Terephthalic Acid (PTA) is an essential raw material for Pakistans textile and
PET packaging industries and forms the backbone of the polyester chain, includingPolyester Staple Fibre, Filament Yarn and PET (bottle grade) resin.
ICI Pakistan Ltd operates with quality standards and always tries to remain competent byproviding optimum quality of products and services to its customers and building longterm relationships with the suppliers, together to grow and prosper making the countryand the society to grow side by side as well. Its fully automated plant makes the qualityof the product more reliable and the end product is surely up to the specifications
requirements. The production plant undergoes continuous improvement processes tomaximize the efficiencies, optimize the use of resources and minimize the waste andloses.
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THE GROUP IN BRIEF
The ICI Group is one of the largest specialty products, coatings and materials companies.
ICI has over 50,000 products more than 200 manufacturing sites and offices in over 55
countries; some 59,000 employees worldwide. ICI has leading international positions in
industrial adhesives, specialty starches, electronic and engineering materials, fragrances,
flavors, food ingredients, specialty agrochemicals, catalysts, synthetic lubricant base
stocks and formulations, personal care ingredients, paints, acrylics, polyurethane
chemical and systems based on MDI (diphenylmethane diisocyanate), ozone benign
refrigerants and titanium dioxide pigments.
STRUCTURE
ICI BOARD
The ICI Board consists of the Chairman, five Executive Directors and five Non-executive
Directors. The Board is responsible for determining the direction and board policies of
the Group consistent with the objective of being the industry leader in creating value for
customers and shareholders.
EXECUTIVE MANAGEMENT TEAM
The management of ICI is through an Executive Management Team headed by the Chief
Executive and comprising the Vice Chairman, Chief Operating Officer, Chief Financial
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Officer, five Executive Vice Presidents, the Senior Vice President of Human Resources
and the General Counsel.
INTERNATIONAL BUSINESS
An Executive Vice President or a Chief Executive Officer heads ICIs International
Businesses. Each is responsible for the financial performance of their business under the
strategic general guidance of the Executive Management Team.
VISION
Today's ICI is about winning - winning to achieve the vision of becoming the industry
leader in creating value for customers and shareholders and to become the most admired
specialty products, paints and materials company in the world.
ICI aims to achieve this through:
Market-driven innovation in products and services. Winning in quality growth markets worldwide ICI will invest in growth markets in which it has leading market positions. ICI's aim is to have all its businesses in such positions and it will do this by
concentrating efforts on the best quality opportunities around the globe.
Inspiration and reward of talented peopleICI is determined to create a way of working that releases the energy and talents of
everyone in the Group.
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Exemplary performance in safety and health.ICI's goal is to have an exemplary performance in safety and health and become the
world leader.
Responsible care for the environment. Relentless pursuit of operational excellence
HISTORYICI was formed on December 7, 1926, by the merger of four of the largest chemical
companies in the UK. Its purpose was to create a British company capable of competing
in world markets with large corporations in America and in Germany. The four
companies merged were Brunner,
Mond & Company Limited, Nobel Industries Limited, British Dyestuffs Corporation
Limited and United Alkali Company Limited.
The plan for the new company was agreed on board the Cunard Line vessel, Aquitania,
on a voyage from New York to Southampton. The architects of the merger were Sir
Harry McGowan, Chief Executive of Nobel Industries, and Sir Alfred Mond, later Lord
Melchett, the Chairman of Brunner, Mond & Company, who became the first ICI
Chairman.
With 33,000 employees, ICI's main products included chemicals, explosives and
accessories, fertilizers, insecticides, dyestuffs, domestic chemicals, leather cloth, printing,
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sporting ammunition and paints. In its first year of business, ICI sold GBP 27 million
worth of these products and made a pre-tax profit of GBP 4.5 million.
Throughout its history, ICI has been at the forefront of scientific discovery and
developing inventions for the marketplace with products such as fertilizers, plastics,
manmade fibers, anesthetics, heart drugs, herbicides, pesticides, commercial explosives,
waterborne paints, reactive dyes and biodegradable plastics.
In 1993, ICI demerged its bioscience businesses of pharmaceuticals, agrochemicals,
specialties, seeds and biological products into a separate, publicly listed company, Zeneca
Group PLC.
Four years later ICI made its biggest ever acquisition when it purchased four businesses
from Unilever - National Starch, Quest, Unichema and Crosfield - for $8 billion. These
operations were merged into ICI to form the basis for the transformation of ICI into the
world's leading specialty products, coatings and materials Group.
ICI has always emphasized research and innovation and is continually engaged in
development programs. The Group relies on 4,000 research, technology and engineering
specialists to maintain a strong technical base and ensure competitive advantage through
the development of new or improved products and processes. Some GBP 200 million is
spent each year on research, development and technical services, to customers. The
results have been most gratifying for ICI, with major discoveries and innovations to its
credit, like Polyethylene, Perspex and the pioneering of many new and efficient processes
and technologies for manufacture.
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The ICI Group today is one of the largest chemical companies in the world, with
international strengths in the areas of paints, materials, explosives and industrial
chemicals. ICI operates its main businesses on an international basis.
In addition, regional businesses located in Pakistan, India, Argentina etc. reinforce the
Group's worldwide competitive strengths.
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ICI IN PAKISTAN
ICI in Pakistan, a leader in industrial chemicals and paints, manufactures and sells a
diversified range of products. The Company's vision is to be the industry leader in
creating value for customers, shareholders, suppliers and employees.
ICI in Pakistan has played an active role in the Country's industrial development and
progress, for well over half a century, and continues to do so, with investment in the
future.
OUR
AGROCHEMICAL
&
SEEDS
PAINTS
POLYESTER
SODAASH
PHARMACEUTICALS
CHEMICALSPURE
TEREPHTHALIC
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Mission Statement
The ICI paints team intends to remain market leaders in the Paints Business.
We wish to be recognized for offering the best products & excellent customer services.
We will run a high quality, profitable and growth oriented business in an exciting and
safe environment.
SWOT ANALYSIS
Strengths
Having a professional management Friendly and cooperative working environment
Technical knowhow & well qualified staff Back selling team, focused directly at consumers, give a way to communicate
directly with consumers.
Brand loyal customers. Excellent financial resources. Well established research and development
Weaknesses
Decision-making on collective basis leads to late decisions. A bureaucratic way of goal setting
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Opportunities
Entering into a new market or segment.New governmental and industrial projects. Innovations.
Threats
Invisible trade barriers.
Mushroom industries Strict government policies
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Introduction of Paint Industry
A chemical oriented liquid used to protect and decorate different kind of surfaces
Paint industry is divided into sectors:
1. Organized Sector
2. Mushroom Sector
Organized Sector
It includes the companies listed in Stock Exchange or the firms registered, having
planned promotional activities with relatively high prices. They fall under the capacity
tax system and distribute in more the one province.
Mushroom Sector
It includes the unregistered firms, having city based distribution with seasonal brands,
having lower prices with no planned promotional activities. They fall under fixed tax
system.
Competitors of ICI
Berger Master paints Gobis paints Buxley paintsNippon paints
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ICI DULUX - THE MARKET LEADER
ICI Dulux is the market leader not only with respect to the quality but also with respect to
turnover. ICI has an edge over it competitors due to its diversified fields. It is known
throughout the world and has good name in other sectors as well, which has given the
advantage to Dulux in paints.
As far as the government is concerned, ICI Dulux is paying all its taxes properly and so it
is not being bothered different government policies.
CORE COMPETENCIES
According to Krajewski:
Core competencies are the core capabilities of a company that it inculcates in its
processes or value chain to deliver the products/services to its customers to satisfy their
needs.
The core competencies can be executed in the form of competitive capabilities in various
dimensions such as:
Cost Quality Time Flexibility
ICI Pakistan Ltd. focuses on providing its customers the products and services on thebasis of all these dimensions, ICI is the market leader in the Paint Industry of Pakistan aswell as a renowned name in the pharmaceutical industry but the company also maintains
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its competitive edge by virtue of being a local manufacturer and major supplier for the
domestic Polyester fiber and Terephthalic Acid (PTA) to industries with short deliverytimes, consistent quality and excellent customer service in Pakistan.
ICI Pakistan Ltd. relies on the following areas for its core competencies to attain its
operations strategy:
High potential market Competitive technology First mover advantage National Company Strength Supply Chain Strategy
The management of the company also believes in providing training to its employees to
ensure continuous improvement in its processes and services. Its commitment to provide
the product and services at competitive costs by achieving efficiencies and maximum
utilization of the resources has made it capable of developing long term relationships
with all its stakeholders.
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PRODUCTION
Product Lines
ICI has diversified product lines like:
Paints Polyester Staple fiber Soda ash
Specialty chemicals Medicines
Market share of different Product line in Pakistan:
Paints 70%
Soda ash 80%
Polyester 25%
Medicines 45%
Product Range (Paints Business)
ICI Dulux isproducing both WATER BASED paints as well as OIL BASED paints.
Water Base Paints
Dulux Pentalite Special Plastic Emulsion (Washable, for masonry surfacestonestructure)
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Dulux Pentalite Natural Whites (for sensitive people from smell, washable withsmooth and durable finish
Dulux Weather Shield (protective paints against extreme weather) Paintex Plus Emulsion ( for price sensitive people) Maxilite (Economical , quality distemper)
Solvent Base Paints
Dulux systhetic Enamel (for wood & metal surfaces) Dulux Pearl Glo (for all surface) Dulux Prime ON (perfect base for emulsion coating) Dulux Red Oxide And Zinc Primer ( to protect metal rust) Dulux Water Repellent (prevents from water and fungal attacks) Dulux Aluminum (for resisting high heat)
Production Process Of Paints
Dispersion Section
In this stage raw materials (Pigment, Resin & Solvent additives) are issued from the
material control department to production department according to the requirement. In
production department raw material are first sent to dispersion section where Wall Mixer
Machine is used to mix all the ingredients. Once the ingredients are mixed then they are
sent to various Grinding Mill Base Machines (Sand Mill, Basket Mill, Bead Mill). These
mills process and grind ingredients for smoothness and dispersion. Here the Gage plate
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(0-50 microns) is used to check to smoothness/dispersion. In this section mixture is
thicker.
Mixing Section
In this section, adding more Resin & Solvent, Additives does further mixing process to
reduce thickness of the mixture. Resin is added to increase the quality, volume and for
further smoothness. Other chemicals are also used to kill the germs and to create
fragrance.
Color Match & Quality Control Section
In this section, special chemicals called Tinters are to add color to the mixture according
the requirement of customers. After adding the color then the quality is checked in the
Quality control laboratory where the followings things are checked:
Color Viscosity (thickness) Weight per liter Glass (shinning) Drying
In color checking, the company has set predetermined color standards (according to the
customer demand) and stable product color is matched according to the standards. If
there is variation then more or less tinters are used to make it according to the standards.
Filling Section
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After matching the colors, the finished product is sent to the Filling Section where Fix
Mixers are used to fill the tins/containers according to their capacity. Ink Jet Machine is
used to print the manufacturing date, expiry date, product price, sales tax, color, and
quantity/volume and product codes. After filling the containers, weight is measured on
the computerized scale. Now the paints are filled in plastic containers for the customer
benefits.
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CAPACITY
It is the maximum rate of output for a facility that even achieved.
No. Of Plants and Their Capacity
ICI has one plant for paints manufacturing located at Lahore. The total capacity of this
plant is 18 million liters per year.
Utilization
Maximum Total capacity = 18 million liters per year
Actual production = 14 million liters per year
Normally they are using two shifts per day.
Utilization ( %) = actual capacity/max capacity = 77.77%
Capacity cushion= 100%-77.77% = 22.23%
FORECASTING
It is a prediction of future events used for planning purposes. ICI make use of the
following approaches in forecasting.
APPAPPROACHES TOWARDS FORECASTING
Forecasting is a function of demand, and three approaches are normally available for
making the forecast of future demand as:
(A)QUALITATIVE APPROACHThis approach incorporates important factors like decision makers emotions, experience,
judgment, etc.It includes:
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Executive opinion Sales force forecast Consumer market survey
(B)QUALITATIVE APPROACHThis approach employs a variety of mathematical models that use historical data to make
a demand forecast but ICI uses average method on the basis of historical data.
Demand PatternICI Paints have a seasonal demand pattern. They have a greater demand in peak periods
like September, October, November, February and March due to Eid and marriage
occasions. But they have demand is less in rainy seasons.
INVENTORY & MATERIAL MANAGEMENT
Material management is concerned with following tasks
Inventory control at stores etc. Supplier selection Issuing purchase releases Work force schedules Inbound transportation & Outbound transportation Inventory control at distribution center
Inventory level determination and inventory management is the crucial events for any
organization. Determination of inventory level depends on the future demand.
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USES OF INVENTORY
Inventory is used to
Provide the stock of goods to meet anticipated demand De-couple production from distribution Take advantage of quantity discounts Hedge against inflation
Protect against shortage Permit operations to continue
TYPES OF INVENTORY
Following are the types of inventory that might be found in any organization. They
are also found at ICI Pakistan Ltd.
Raw material inventory Work-in-process inventory Finished goods inventory
INVENTORY MANAGEMENT AT ICI
Management at ICI carries out the basic functions of inventory management in a
sophisticated way. Basically, ICI gives close focus to the inventory functions like
purchasing and distribution. The raw materials used are
Pigment Resin Solvents Additives
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INVENTORY CONTROL & RECORDS AT STORES IN ICI
ICI is very concerned with inventory records and controls, which is one of the factors
contributing towards their success. Store is headed by store supervisor or store officer.
They told me that they keep record of every type of material with their weight and
quality. They have to maintain record of ledgers manually and computerized as well.
When some departments require certain part then they issue with the permission of
manager (Dept) & record in their books.
INVENTORY INSPECTION
At ICI, inspection of inventory is made. Actually, the purpose of inspection is to see that
whether the inventory level has reached to the level that has been designated as reorder
point. If this reorder point is reached then the order is placed.
RELATIONSHIP WITH SUPPLIERS
ICI maintains a very cooperative relationship with their local and foreign suppliers. They
also invite their suppliers to their organization.
PROCUREMENT DEPARTMENT
This department arranges for purchase of an item and when that item is to be purchased.
Then store records it and keeps it in a specified location & issues it to the desired
department.
PROCUREMENT PROCEDURE
Production demand & monthly forecasting is considered keeping in viewlead-time &
minimum stock level. ICI purchase its raw material from local as well as from other
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countries. They import some items like Titanium dioxide, which is used in paints and
purchased some, items locally
Account department issues checks for payment Lead time for imported items is 30 to 70
days. When purchased items enter the factory gate then they are checked by gatekeepers
& send to store.
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DISTRIBUTION SYSTEM
The distribution system of ICI Dulux is dealer oriented. It has a wide network of
distribution throughout Pakistan but all the distribution is done through dealers. ICI
Dulux has its own warehouses and from there the products are directly transported to the
dealers who ultimately sell them to the customers.
Therefore the Distribution Channel of all sorts of paints is
ProducerDealerConsumer
TOTAL QUALITY MANAGEMENT AT ICI
At ICI, quality is employed in each and every step of production process and it starts
from the purchase of raw material and ends at the final product.
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RAW MATERIAL CHECKING
All raw materials and their quality are checked so as to ensure that no material with bad
quality could harm the quality of finished product.
QUALITY TESTING
ICI Paints has a proper and standardized Quality Control Laboratory, which test the
quality of paints. They check opacity, density, smoothness, drying, glass, color, life,viscosity and weight.
EMPLOYEE INVOLVEMENT IN TQM
It is very necessary every employee should take interest in maintaining the quality of
product. ICI are taking various steps to involve their employees in TQM by giving them
training, continuous feedback, incentives and awards & by encouraging teamwork. They
give annual rewards to those employees who give more suggestions to improve quality.
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ISO Certification
1. ICI & ISO 9000 StandardsISO 9000 is a set of standards governing documentation of quality program. ICI become
certified in 1999 by complying the requirements of ISO 9001. ISO 9000 is an overview
document, which provides guidelines for selection and use of the other standards.
2. ICI & ISO 9001 StandardsICI has got ISO 9001 in 1999 by meeting all the requirements, which are included in this
standard. ISO 9001 is a standard that focuses on 20 aspects of a quality program for
companies that design, produce, install and service products. These aspects include:
Managementresponsibility
Quality systemdocumentation
Purchasing Product design Inspection Training Corrective action Produce Installation Service
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CONCLUSION
ICI Pakistan Ltd. has a diversified manufacturing portfolio ICI is the market leader in the
Paint Industry of Pakistan as well as a renowned name in the pharmaceutical industry.
The company also maintains its competitive edge by virtue of being a local manufacturer
and major supplier for the domestic Polyester fiber and Terephthalic Acid (PTA) which
gives them a competitive edge over other chemical manufacturers, along with its long
term relationship with customers, suppliers and other stakeholders. Their automated
process gives them a competitive edge in the production efficiency. They are following
ISO standards, MRP Class A and are laying foundation of HSE&S standards along withthe continuous improvement in their production process to optimize the utilization of the
available resources.
ICI Pakistan Ltd. is striving for betterment, now operating at PTA production of 40 tons
per hour plant capacity; however the plant was initially designed for 44 tons per hour
PTA production. Their plan for a power plant installation is also a step towards making a
more competitive edge and maximizing its efficiencies. This 40 MGW power plant is
being installed and engineering is in process.
ICI Pakistan Ltd. keeps a record of its inventory as well as their scheduling mechanism
that keeps the track of all the processes and planned productions. Forecasting helps them
to predict the demand of PTA in the market and plan their production accordingly. The
production and operations management system in ICI Pakistan Ltd is a good example of a
sound production and operations management system in an organization.