1
Anum Qasim Muhammad Abdul Rehman Syeda Rida Rizvi Talha Talha Humayun Masud Zahra Daha
Supply Chain Management Final r!"e#t April $% &'1( Mr) Salman *hsan
& Table Ta ble !+ C!ntents ,ntr!du#ti!n))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))( Vision Statement........................................................................4 Mission Statement......................................................................5 *ngr! F!!ds- Supply Chain Management r!#ess)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))). r!du#ti!n r!#ess)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))/ Chilling and Storage...................................................................7 Milk Processing..........................................................................7 asteurizati!n)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))/ 0HT Treatment)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) Packaging..................................................................................8 Push or Pull strategy..................................................................8 Objectie Objectie o! Su""ly Chain Management Management at #ngro $oods.... $oods......... ......... .......% ...% Su""ly Chain Strategy at #ngro $oods.........................................% Managing the Supply Chain))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1' Su""lier&'elationshi" Su""lier&'elationshi" Management Management (S'M) at #ngro $oods......... $oods...........*+ ..*+ Drivers !+ Supply Chain at *ngr! F!!ds)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1$ $acilities...................................................................................*, 2!#ati!n !+ lants))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1$ 2!#ati!n !+ 3++i#es))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1$ 4e5 r!#essing lant !+ *ngr!))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) ))))))))))))))))))) )))))))))) ))))))))))))1$ )))1$ Sourcing -ecisions.................................................................... -ecisions.................................................................... *4 Ra5 Material r!#urement))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1( Ra5 Material)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))16 S!ur#ing !+ a#7aging Material))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))16 S!ur#es !+ Mil7 Supply)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))16 Dire#t S!ur#es))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1. Mil7 C!lle#ti!n Centre))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1. C!ntra#t!r 8ased C!lle#ti!n))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1/ Cust!mer-s 2!#ati!n))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1/ nentory /andling at #ngro $oods............................................*8 ,nvent!ry Management at 9areh!uses:)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))1; n!ormation Sharing at #ngro #ngro $oods..................................... $oods........................................... ......0+ 0+ CRM System used at *ngr! F!!ds))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))&1 1ogistics 2 -istribution at #ngro $oods3................................ $oods3.....................................00 .....00 rans"ortation /andling at #$1.................................... #$1................................................. ..............00 .00 Distribut!rs Transp!rtati!n))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))&$ C!mpetit!r Analysis 4estle Mil7 a7)))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))& $acilities...................................................................................08 Sourcing o! Milk..................................................... Milk.................................................................... ................... ....08 08 Sourcing o! Packaging Packaging Material..................................................08 nentory /andling...................................................................08 rans"ortation..........................................................................08
$ n!ormation /andling................................................................0% Pricing.....................................................................................0% Re#!mmendati!ns))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))$'
(
Introduction
a7istan-ss m!st pr!gressive pr!gressive%% Engro stands for “energy for growth”. *ngr! is !ne !+ a7istangr!5th !riented !rganizati!ns) Fr!m in#epti!n% their lega#y is !+ #!ntinu!us gr!5th% ne5 #hallenges and +ul+illed pr!mises) Fr!m +ertilizers t! dairy pr!du#ts% business s!luti!ns t! uality brands li7e 3lper-s% 3l5ell% Tarang% and 3m!re have been su##ess+ully laun#hed under the helm !+ C!mpany-s dairy pr!du#ts) T! supp!rt these brands and their highest standards !+ >uality% *ngr! F!!ds has invested heavily in mil7 pr!#essing and mil7 #!lle#ti!n in+rastru#ture) A+ter the su##ess !+ the dairy pr!du#ts% t! 5hi#h the #ust!mers testi+y% *ngr! F!!ds n!5 plans t! venture ven ture bey!nd be y!nd the dairy se#t!r) &'11 has als! seen the beginning beg inning !+ ! + sales +r!m its !5n ri#e pr!#essing plant) 9ith an a#>uisiti!n !+ Al Sa+a ? a +ast gr!5ing and established Halal meat brand ? *ngr! F!!ds is n!5 venturing int! 4!rth Ameri#an mar7et starting +r!m Halal F!!ds #ateg!ry) The ne5 !rganizati!n% *ngr! F!!ds Canada 2td) 5ith a subsidiary *ngr! F!!ds 0SA% 22C% intends t! aggressively gr!5 the business in this mar7et) 9ith the visi!n !+ *levating C!nsumer Delight 9!rld5ide% C!mpany-s signi+#ant +!#us 5ill be t!5ards the gl!bal !perati!ns in the years t! #!me)
Vision Statement
@Aims at trans+!rming the #!mpany 5ithin net +ive years int! +irst a nati!nal +!!d industry giant% then int! a regi!nal +!r#e and +inally int! a gl!bal player) pla yer)BB
6 Mission Statement
@8uild 8randed +!!d business t! impr!ve >uality !+ li+e by !++ering tasty% a++!rdable and highly nutriti!nal pr!du#ts t! !ur #!nsumers 5hile maimizing sta7e h! lders value)B
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Engro Foods’ Supply Chain Management rocess
Dairy is !ne !+ the gr!5ing segment !+ livest!#7 sub=se#t!r and imp!rtant #!mp!nent !+ a7istan-s e#!n!my) a7istan is the +i+th largest pr!du#er !+ mil7 in the 5!rld) Mil7 pr!du#ti!n in a7istan has seen a #!nstant in#rease during the last t5! de#ades and this has +inally translated int! a mushr!!ming !+ ne5er entrants int! the Mil7 r!#essing industry !+ this #!untry in the ne5 millennium) *ngr! F!!ds is !ne !+ the latest dairy mil7 pr!#essing ventures al!ng 5ith Sha7argan" 5ith its E!!d Mil7-) Thus the +a#t that *ngr! is a ne5ly established !rganizati!n in a +ield 5here perish ability !+ mil7 ma7es it imperative +!r supply #hain t! be managed) This !rganizati!n has #are+ully planned and ee#uted the supply #hain) This is evident +r!m the +a#t that the mil7 pr!#essing plants are l!#ated in Su77ur and Sahi5al i)e b!th the pr!vin#es !+ a7istan) The dairy +arms m!stly independently !5ned have been lin7ed and are suppliers !+ *ngr! that are #l!sely l!#ated t! ensure the supply !+ mil7 !n time 5ith!ut any delay !r detriment t! the mil7) Supply Chain !etwor"#
The ab!ve #hart depi#ts the !verall supply #hain management pr!#ess at *ngr! F!!ds vtG 2td) These a#tivities #an be divided int! three all en#!mpassing #ateg!ries as 5ell: •
In$ound %ogistics : the re#eiving and 5areh!using !+ ra5 materials and their
distributi!n t! manu+a#turing as they are re>uired) •
pr!#esses ses !+ trans+ trans+!rm !rming ing inputs inputs int! int! +inis +inished hed pr!du# pr!du#ts ts and &perations : the pr!#es servi#es)
/ •
&ut$ound %ogistics : the 5areh!using and distributi!n !+ +inished g!!ds)
roduction rocess
Chilling and Storage
Milk Processing (Pasturization, Homogenization, Other Process Processes) es)
Packaging
Chilling and Storage
The pr!du# pr!du#ti! ti!n n pr!#es pr!#esss at *ngr! *ngr! F!!ds F!!ds #!nsis #!nsists ts !+ +!ur +!ur steps) steps) Firstl Firstly y% ra5 mil7 is #!lle#ted +r!m mil7 #!lle#ti!n #enters by tan7ers and br!ught t! plants +!r pr!#essing) 3n arrival% the mil7 is tested +!r appearan#e% smell and temperature% and a sample is ta7en +!r analysis in lab!rat!ries) A series !+ tests are #arried !ut relating t! the #!mp!siti!nal and hygieni# >uality !+ the mil7) Sub"e#t t! the satis+a#t!ry #!mpleti!n !+ these tests% the mil7 in the tan7er is then unl!aded int! a sil!) The mil7 pr!#essing +a#t!ries #!!l the ra5 mil7 at a temperature !+ 6C !r less int! #!!ling tan7s pri!r t! being passed thr!ugh heat treatment +a#ilities) The #hilling pr!#ess helps t! #urb ba#terial gr!5th in mil7) Mil" rocessing asteuri'ation
4et #!mes the pasteurizati!n stage% 5hi#h is the pr!#ess !+ b!iling the mil7 and then immediately #!!ling it t! a l!5er temperature) The mil7 is pasteurized at 6!C% 5hi#h helps t! 7ill ;I !+ the germs present in the mil7) asteurizati!n serves as the separati!n p!int !+ ra5 mil7 int! di++erent pr!du#ts% 5hi#h in#lude Tarang% Tarang% 3lpers and 3l5ell) At this p!int the #ream and +at are rem!ved +r!m the mil7 and !ther spe#ial ingredients are added al!ng 5ith it t! the mil7 as per the re>uirements !+ ea#h pr!du#t) F!r eample%
; Tarang is a high=+at tea 5hitener and there+!re it needs m!re #ream #!ntent and di++erent ingredients as #!mpared t! a pr!du#t li7e 3l5ell% 5hi#h is l!5 +at and re>uires less #ream) The mil7 a+ter pasteurizati!n is then standardized as pres#ribed by the a7istan ure F!!d 2a5s at $6I $ 6I Fats and );I S4F s!lid n!n +atsG) ()* *reatment
The pasteurized mil7 is then passed thr!ugh the 0HT 0ltra Heat TreatmentG) This is the m!st s!phisti#ated and advan#ed stage in mil7 pr!#essing) ,n this pr!#ess the mil7 passes thr!ugh 1(' degree #entigrade in the +irst $ se#!nds and it is then immediately #!!led t! &' degree #entigrade in the net 6 se#!nds% 5hi#h in turn 7ills all the ba#teria) The 0HT pr!#ess #an be a#hieved a#h ieved either thr!ugh indire#t !r dire#t heating h eating systems) ,n the indire#t meth!d the mil7 is heated by steam passing thr!ugh stainless steel pipes !utside mil7 tan7s) ,n the dire#t meth!d either the steam is dire#tly in"e#ted int! the mil7 !r the mil7 is +!r#ed thr!ugh a +ine n!zzle int! a tan7 +illed 5ith steam) *ngr! F!!ds ma7es use !+ the dire#t system +!r the 0HT pr!#ess) ac"aging
F!ll!5ing the heat treatment% the mil7 is #!!led in a sterile va#uum #hamber) A+ter the heat treatment the mil7 is #!!led and pa#7ed in Tetra a7 #art!ns as s!!n as p!ssible t! prevent #!ntaminati!n) #!n taminati!n) The pa#7aging pr!#ess is als! #are+ully m!nit!red) The pa#7ages underg! underg! stringent #!ntr!ls #!ntr!ls t! #he#7 that they are sterilized) sterilized) The mil7 is then +illed +illed int! the the #art #art!ns !ns under under asept asepti# i# #!nd #!ndit iti! i!ns ns)) The The #art! #art!ns ns are are +ill +illed ed aut!m aut!mat ati# i#al ally ly and #!ntinu!usly under #!mpletely sterile #!nditi!ns and then heat=sealed ush or ull strategy
*ngr! F!!ds +!ll!5s push strategy as they ma7e pr!du#t% 5hi#h are standardized and then push them in t! mar7et)
1' &$+ecti,e of Supply Chain Management at Engro Foods
The primary !b"e#tive !+ supply #hain management at *ngr! F!!ds is “Fulfilling customer’s demands in the optimum way”
Thus #!st redu#t redu#ti!n i!n is de+ini de+initel tely y !n t!p !+ the pri!rity pri!rity list +!r *ngr! but +ul+il +ul+illin ling g #ust!mer-s demands is "ust as imp!rtant) Thus the g!al !+ these a#tivities is t! !++er the #ust!mer a level !+ value that e#eeds the #!st !+ the a#tivities% thereby resulting in a pr!+it margin) Supply Chain Strategy at Engro Foods
The supply supply #hain #hain strate strategy gy is !bvi!us !bvi!usly ly in line line 5ith 5ith the !b"e#t !b"e#tive ive +!r supply #hain manag managem ement ent%% 5hi# 5hi#h h in turn turn is in line line 5ith 5ith the the !ver !veral alll miss missi! i!n n and and value valuess !+ the the !rganizati!n% all !+ 5hi#h have been stated ab!ve) S! 5hen narr!5ing d!5n t! the strategy% it is “A give-away between “the service factor” and low cost”
S! i+ 5e lin7 it t! the the!reti#al #!n#epts that have been taught t! us in this Supply Chain Management #!urse% the basi# appr!a#h t!5ards a #!mpetitive advantage !ver the #!mpetit!rs% s!me established !ther ne5er entrants is a #!mbinati!n !+ l!5 #!st and rapid and +leible resp!nse% right n!5 it su++i#e t! state that an eample !+ l!5 #!st strategy thr!ugh the l!#ati!n !+ the plants near the abundant s!ur#es !+ supply% +arms and +armers s! as t! redu#e the transp!rtati!n #!st and #!st !+ mil7 deteri!rati!n and subse>uent l!sses) An eample !+ resp!nse 5!uld be the use !+ third party l!gisti#s t! ensure that they are resp!nsive en!ugh t! meet #ust!mer re>uirements)
11
Managing the Supply Chain
Supply #hain management SCMG is a br!adened management +!#us that #!nsiders the #!mbined impa#t !+ all th!se inv!lved in the pr!du#ti!n !+ g!!ds and servi#es% +r!m suppliers t! manu+a#turers t! 5h!lesalers t! retailers t! +inal #!nsumers and bey!nd t! disp!sal and re#y#ling) Supplier-elationship Management /SM0 at Engro Foods
There There are are vari vari!u !uss meth meth!d !dss that that #an #an be used used t! a#hi a#hiev evee the the g!als g!als !+ supp supply ly #hain #hain management) *ngr! F!!ds believes in ma7ing its suppliers- partners in the +irm-s strategy strategy t! be able t! satis+y an ever=#hanging mar7et pla#e) ,t believes in +!rming l!ng=term partnering relati!nships 5ith its suppliers rather than engaging in pri#e 5ars and pr!#uring ra5 materials !n a sh!rt=term basis) ,t endeav!rs t! a#hieve its g!als by strengthening relati!nships 5ithin the lin7s !+ the #hain) *ngr! F!!ds pr!#ures +resh mil7 +r!m b!th in+!rmal and +!rmal s!ur#es) The in+!rmal s!ur#es in#lude traditi!nal mil7 #!lle#t!rs% small% medium% and large=s#ale d!dhis) The +!rmal s!ur#es in#lude third=party mil7 #!lle#t!rs 5h! n!t !nly supply mil7 t! *ngr! F!!ds but als! t! vari!us industry players in#luding Haleeb F!!ds and 4estle) This results in #utthr!at #!mpetiti!n am!ngst the ma"!r players t! !btain ade>uate >uantity !+ mil7 t! meet the pr!"e#ted level !+ ! + sales) C!mpanies engage in di++erent #!mpetitive pra#ti#es% li7e pri#e 5ars% espe#ially 5hen demand +!r mil7 and mil7 pr!du#ts pr!du#ts are high% usually during the summer seas!n) During the summer seas!n% demand +!r mil7 e#eeds the supply s! #!mpanies +!resee great !pp!rtunity t! in#rease their sales and pr!+itability given that they are able t! a#>uire en!ugh supply !+ mil7 t! meet the +!re#asted demand) Sin#e supply !+ mil7 is limited #!ntra#t!rs pre+er t! sell t! th!se #!mpanies 5h! n!t !nly !++er the best pri#e but 5h! als! treat them as an integral part !+ the supply #hain) *ngr! F!!ds rein+!r#es its strategy !+ +!rming l!ng=term relati!nships 5ith its suppliers by 5inning their trust and l!yalty) ,t d!es s! by b y helping its +armers 5hen they the y are g!ing
1& thr!ugh a di++i#ult time i)e) during the +lush seas!n-) ,n the +lush seas!n +armers have an e#essive supply !+ mil7 5hereas the demand +!r mil7 is l!5) ,t usually happens during the 5inter seas!n 5hen supply !+ mil7 tends t! e#eed the demand) Sin#e +resh mil7 is a highly perishable item it demands pr!mpt and e++i#ient #!lle#ti!n +r!m mil7 pr!du#ers +!r use by #!nsumers and manu+a#turers !+ mil7 pr!du#ts) There+!re are in#reasingly #!n#erned ab!ut their mil7 supply) *ngr! F!!ds relieves the +armers by pur#hasing mil7 +r!m them 5hen n! !ther #!mpany is 5illing t! d! s!) Sin#e pr!#essed mil7 has a shel+ li+e !+ three m!nths *ngr! F!!ds pr!#esses the ra5 mil7 and st!res it in @bu++er tan7sB +!r later use) An!ther strategy empl!yed by the #!mpany t! redu#e the imbalan#e bet5een demand and supply and ma7e e++e#tive use !+ this mil7 is t! #!nvert it in p!5dered +!rm) !5der mil7 has a shel+ li+e !+ & years s! they #an st!re it +!r a l!nger time peri!d this 5ay) 9hen demand +!r mil7 tends t! in#rease in the mar7et they utilize the p!5dered mil7 by diss!lving it and #!nverting it ba#7 t! its li>uid +!rm) This builds a mutual relati!nship !+ trust and l!yalty bet5een the mil7 +armers and *ngr! F!!ds sin#e this strategy is bene+i#ial t! the +armer sin#e it #reates a steady #hannel +!r their e#essive supply !+ mil7 in the +lush seas!n) This appr!a#h has pr!ven +av!rable +!r *ngr! F!!ds as 5ell% sin#e the +armers have n!5 be#!me l!yal t! their #!mpany and is 5illing t! supply them at the best p!ssible pri#e)
1$ Supply Chain Map of Engro Foods
1(
16
1ri,ers of Supply Chain at Engro Foods Facilities %ocation of lants The dairy pr!#essing plant is situated at Su77ur J Sahi5aal) • •
The !++i#e !+ *ngr! +!!ds is situated in S u77ur)
%ocation of &ffices The head !++i#e !+ *ngr! F!!ds is l!#ated near Sea
There regi!nal head !++i#es are in: 2arachi located in 3usiness 4,enue Shahrah 5 e - Faisal %ahore Multan awalpindi eshawar 6u+ranwala
They believe that their re#ent su##esses 5ill ta7e them t! their g!al that is @T! be !ne !+ the biggest players in the +!!d business b usiness by d!minating the +!!d businessB) !ew rocessing lant of Engro *ngr! has started a *ur! $ milli!n mil7 pr!#essing plant +!r *ngr! F!!ds in a7istan) ,t
is !ne !+ the biggest plants !+ its 7ind in a7istan and the +irst ever in the Sahi5al regi!n) The #!mmissi!ning !+ the plant 5as #!mpleted in "ust & m!nths and !perati!n started by end De#ember &''/)
1. The plant supplies the regi!n ar!und Sahi5al 5ith &6'%''' liters !+ l!5 +at mil7 a
•
day% that-s that-s 1 milli!n servings% and 1' milli!n servings !+ Tarang Tarang tea 5hitenerG) The plant pr!vides a pr!#essing !utlet +!r the l!#al +armers 5h! rear dairy herds
•
!+ #!5s and% espe#ially in the smaller +arms% bu++al!) The *ngr! plant als! #!ntributes t! the l!#al e#!n!my by empl!ying s!me &''
•
pe!ple thr!ugh!ut the +a#t!ry) •
aw mil" reception handles up t! ('%''' litLhr !+ b!th #!5 &'IG and bu++al!
'IG mil7 +r!m the surr!unding regi!n-s +armers #!!ling it +r!m appr!imately 16C t! (C +!r st!rage in the t5! 1&6m$ st!rage tan7s) •
The pr!#ess #an pasteurize mil7 t! 6C at the rate !+ &6%''' litLhr and in#ludes mil7 #lari+i#ati!n and s7immingN standardizati!n +!r mil7% #ream% S4F and butter !ilN butter !il d!singN a re+urbished h!m!genizerN and degassing)
Su77ur: The l!gisti#s usually ta7e !ne day t! arrive at !lpers 5areh!uses in Kara#hi +r!m their manu+a#turing +a#t!ry at su77ur) Sahi5aal: This manu+a#turing plant #!vers 5h!le !+ the #entral un"ab) Ra5alpindi: ,t is a satellite 5areh!use 5ith a #!vered area !+ $'''' s> +t that is !n rental basis and it #!sts .''%'''Lm!nth) .''%'''Lm!nth) ,ts resp!nsibi resp!nsibility lity in#ludes +ul+illing +ul+illing the !rders !+ the n!rthern n!rthern regi!n)
1/ Sourcing 1ecisions aw Material rocurement Ra5 material pr!#urement plays the m!st integral part in the su##ess !+ any supply #hain)
The reas!n being% that it is the elementary level a#tivity and i+ there are +la5s in it% the >uality !+ the ra5 materials !btained is at sta7e) At the same time *ngr! F!!ds als! establishes and maintain l!ng term relati!nship 5ith their suppliers) This 5ay *ngr! F!!ds is playing an imp!rtant r!le t! pr!du#e and mar7et a range !+ high >uality dairy in a #!untry 5here a huge >uantity !+ this #!mm!dity is 5asted ea#h year due t! an ine++i#ient +arm=t!=mar7et in+rastru#ture) aw Material The vari!us 7inds !+ ra5 materials re>uired +!r the mil7 and #ream pr!du#ti!n at *ngr!
+!!ds in#lude: •
Ra5 Mil7
•
a#7aging material
The ra5 mil7% 5hi#h is then +urther pr!#essed in the manu+a#turing plants at Sahi5al and Su77ur Su77ur is the the #!re #!re ra5 ra5 mate materi rial al at *ngr *ngr! ! F!!ds F!!ds be#a be#aus usee thei theirr pr!d pr!du# u#tt p!rt p!rt+! +!li li! ! en#!mpasses all dairy based pr!du#ts) The ra5 mil7 that is mainly the bu++al! mil7 is !btained +r!m the vari!us dairy +arms a#r!ss the #!untry 5ith m!st !+ these dairy +arms being l!#ated in Sindh and un"ab regi!n) Sourcing of ac"aging Material The pa#7aging material used by *ngr! F!!ds is supplied +r!m Tetra a7 2td) ,t is in the
+!rm !+ r!lled sheets !+ asepti# pa#7aging arriving at the manu+a#turing plant dire#tly +r!m the supplier) The asepti# pa#7ages are sterilised pri!r t! +illing !+ 0HT 0ltra Heat
1 TreatedG mil7% resulting in a .=layered Tetra a7 8ri#7 Asepti# pa#7aging% 5ith a $ m!nths shel+ li+e) Sources of Mil" Supply At *ngr! F!!ds the supply !+ ra5 mil7%that is the 5ay mil7 #!lle#ti!n is d!ne #an be
divided int!: •
Dire#t S!ur#es
•
C!nta#t!r based #!lle#ti!n
1irect Sources The meth!d !+ mil7 #!lle#ti!n thr!ugh dire#t s!ur#es #an be de+ined as mil7 #!lle#ti!n
d!ne d!ne thr! thr!ug ugh h vari! vari!us us dairy dairy +arm +armer erss resi residi ding ng in di++ di++er erent ent vill villag ages es))
mil7 mil7 #!lle# #!lle#ti ti!n !n thr!ugh thr!ugh dire#t dire#t s!ur#e s!ur#es) s) ,t starte started d !++ 5ith 5ith hundred hundred Mil7 Mil7 C!lle# C!lle#ti! ti!n n Centers in Mar#h &''. and n!5 it has !ver +ive hundred and +i+ty Mil7 C!lle#ti!n Centers !perating a#r!ss the #!untry) T!day% *ngr! F!!ds #an be regarded as having !ne !+ the the larg larges estt mil7 mil7 #!ll #!lle#t e#ti! i!n n net5 net5!r !r7s 7s in the the #!unt #!untry ry that that is unmat unmat#h #hed ed in size size%% pr!du#tivity and e++i#ien#y t! meet the sel+=imp!sed #!mmitment t! >uality) The vast net5!r7 #!mprises !+ village mil7 #enters that are e>uipped 5ith #hillers t! preserve the >uality pri!r t! l!ng hauls t! the +a#t!ries served by spe#ially designed tan7ers)
1; The main !b"e#tive !+ Mil7 C!lle#ti!n Centre is t! deal 5ith small >uantities !+ mil7 pr!vided by the village dairy +armers) 3n !ne hand% it has pr!ved a regular s!ur#e !+ in#!me +!r +armers thr!ugh an assured and gr!5ing in#!me resulting +r!m the sale !+ their mil7% and !n the !ther% it has enabled *ngr! F!!ds t! #!lle#t better >uality mil7 in the >uantities it needs) At the Mil7 C!lle#ti!n Centre a trained mil7 #!lle#ti!n agent 5h! tests and re#!rds every supply +!r >uality and +at #!ntent #!lle#ts the mil7 and re"e#ts the mil7 that d!es n!t #!n+!rm t! their >uality >ua lity standards) Contractor 3ased Collection The #!ntra#t!r based mil7 #!lle#ti!n inv!lves #!lle#ting mil7 +r!m appr!ved suppliers
5h! are are a5ar a5aree !+ the the >ual >ualit ity y stan standar dards ds ad!p ad!pte ted d by the the +irm +irm)) The The #!ntr #!ntra# a#t! t!rs rs are are resp!nsible +!r mil7 #!lle#ti!n +r!m a large area and #an bring ab!ut ten th!usand liters !+ mil7 a day +r!m dairy +arms) This meth!d !+ #!ntra#t!r based #!lle#ti!n #!ntributes the m!st t! the !verall >uantity !+ ! + mil7 #!lle#ti!n) 3n#e this mil7 is tested +!r the pr!tein% la#t!se and butter+at #!ntent it is sent t! the #hiller #!ntainers that pr!te#t mil7 +r!m air% light and heat) This mil7 is then transp!rted t! the plant) These #hiller #!ntainers are asepti#ally #leaned be+!re mil7 is st!red in them) Customer’s %ocation The *ngr! *ngr! F!!ds F!!ds C!mpany C!mpany sells sells its pr!du#t pr!du#tss !perati !perati!ns !ns t! distri distribut! but!rs% rs% +!unta +!untain in
5h!lesalers and retailers) These then distribute t! retail !utlets% mil7 bar and #!rner st!res% st!res% restaurants restaurants%% petr!lL petr!lL gas stati!ns% entertainment entertainment venues and ne5s agents) ,ts dairy pr!du#ts #!ver alm!st ;I !+ the retail !utlets all !ver a7istan as *ngr! F!!d 5h!lesa 5h!lesaler lerLdi Ldistr stribu ibut!r t!rs% s% retail retailL#! L#!rne rnerr st!res st!res%% departm departmenta entall st!re st!re and +inall +inally y t! the #!nsumer) *ngr! F!!d d!esn-t n!t distribute its pr!du#ts dire#tly t! their #ust!mers rather rather interm intermedi ediari aries es li7e li7e distri distribut but!r-s !r-s agents agents%% 5h!les 5h!lesale alers rs and retail retailers ers are usuall usually y
&' inv!lved) inv!lved) These dairy pr!du#ts are made available available in all the ma"!r retail !utlets !+ the 6 imp!rtant #ities they !perate in) These ma"!r retail !utlets in#lude large mar7ets li7e Metr!% Ma7r!% Oalal S!ns% Al=Fateh% HK8 and Hyperstar) ,t is als! distributed t! the retailers !+ small departmental st!res li7e C3SC C3SC3% 3% 8est 8est ri# ri#e% e% Harr Harr!l !ld d Supe Superr and and CSD) CSD) S!me S!me #!nve #!nveni nien entt st!r st!res es and and Eas Eas MartsL7i!s MartsL7i!s7s 7s als! #arry their dairy pr!du#ts) These #!nvenient #!nvenient st!res in#lude the utility utility st!res and the #!rner sh!ps 7h!7asG l!#ated at the #!rner !+ a street !r near the residential bl!#7) The EasLpetr!l Marts l!#ated in di++erent stati!ns li7e Shell% Calte and S3 has als! #!nne#ti!ns 5ith *ngr! F!!d distribut!rs !r 5h!lesalers) *ngr! F!!d dairy pr!du#ts are distributed am!ng di++erent retail !utlets in imp!rtant #ities li7e 2ah!re% Kara#hi% ,slamabad% Multan and Ra5alpindi as 5ell as all !ver a7istan and +inally rea#hes its end #ust!mers)
In,entory )andling at Engro Foods Stoc" "eeping units of &lpers Mil"#
The #!mpany is maintaining maintaining +!ur SK0-s SK0-s st!#7 7eeping unitsG +!r 3lpers 3lpers in tetra pa#7s that are •
16''ml
•
1'''ml
•
6''ml
•
&6'ml
Stoc" "eeping units of &lpers Cream# •
P 2itre &6' mlG: &/ pa#7s per shrin7=5rapped tray
&1
Stoc" "eeping units of &lwell# •
1 2itre 1''' ml G : 1& pa#7s per #art!n
•
2itre 6'' mlG : 1& pa#7s per shrin7=5rapped tray
Engro Foods In,entory *urno,er •
3n every &.th day !+ m!nth invent!ry at *F2 gets replenish)
&rder Fulfillment ate#
At *F2 its .=/ I +!r 3lpers) %ead-time of &lpers#
2ead=time 5ith regards t!: •
r!#urement !+ mil7 varies in bet5een ( days d ays t! even m!nths)
•
3rder pla#ement t! !rder +ul+illment: 1&=1 hrs
Safety Stoc" •
F!r !lpers hardly .=/ days sa+ety st!#7 is 7ept be#ause !+ its l!5 shel+ li+e) Time t! time +!re#asting is d!ne in sh!rt intervals t! meet the level !+ demand)
In,entory Management at 7arehouses# The #!mpany has three 5areh!uses !ut !+ 5hi#h t5! are l!#ated 5ithin the pr!du#ti!n
plant i)e) in Su77ur J Sahi5al and the !ther being the #entral 5areh!use l!#ated in Ra5alpindi) •
Su77ur 5areh!use having a #apa#ity !+ 1). milli!n liters 5ith a daily average dispat#h !+ $6'%''' liters J a pallet #apa#ity !+ &''')
•
Sahi5al 5areh!use having a #apa#ity !+ ( milli!n liters 5ith a daily average dispat#h !+ (''%''' liters J having a pallet #apa#ity !+ 6''')
•
&& They are having a #r!ss d!#7 5areh!using system) At Mari pur and it is being !perated by the transp!rters
•
The temperature !+ the 5areh!use is maintained at &6=& degrees in !rder t! 7eep mil7 in its +resh #!nditi!n)
•
8e#ause !+ its perishable nature they are u sing the F,F3 invent!ry system)
•
There is a #limate #!ntr!l system in there 5areh!uses as the temperature !+ Su77ur J Sahi5al sh!!ts up t! (6 degrees in summers)
•
They are maintaining .=/ days sa+ety st!#7)
Storage of finished goods
4!5 that the *ngr! +!!ds- pr!du#ts have been pr!du#ed and have assumed the +!rm !+ +inished g!!ds% the net step inv!lves the immediate trans+er !+ the pr!du#ts t! the 5areh!using +a#ility maintained right net t! ea#h !+ the pr!du#ti!n plants)
Information Sharing at Engro Foods EF% E System
*C2 has its !5n dedi#ated 4et5!r7 !+ ,ntranet 5ith a ba#7b!ne !+ ,nternet J TC2 Fiber lines) Thr!ugh this s!phisti#ated J 5idespread intranet% All 8usiness +un#ti!ns !+ *)F)2 *)F)2 are integrated 5ith ea#h !ther li7eN •
r!du#ti!n
•
2!gisti#
•
A##!unts J +inan#e
•
Mar7eting
•
Sales
&$
This 9idespread intranet is als! !++ering a plat+!rm +!r devel!ping and depl!ying #riti#al business appli#ati!ns t! supp!rt business !perati!ns and management de#isi!n ma7ing a#r!ss the ,nternet 5!r7ed enterprise) Many #ust!mers appli#ati!n has been devel!ped at *C2% 5hi#h helps in •
3rder r!#essing
•
,nvent!ry C!ntr!l
•
Sale management J rep!rting
•
ee#utive in+!rmati!n system
These appli#ati!ns are designed t! inter+a#e 5ith% and a##ess% eisting #!mpany database and lega#y system) This s!+t5are +!r su#h uses has been then installed !n intranet 5eb Servers) *mpl!yees at regi!nal !++i#es in#luding Head !++i#e #an a##ess and run appli#ati!ns using 5eb br!5sers +r!m any5here !n the net5!r7 5henever needed) CM System used at Engro Foods ri!r t! the start !+ &'';% *ngr! F!!ds 5as relying !n Mi#r!s!+t *#el spreadsheets t!
re#!rd and manage #ust!mer in+!rmati!n) 9hile this 5as a##eptable 5hen the #!mpany 5as +irst laun#hed% it pr!ved untenable 5hen the business began epanding) 8ut due t! business has gr!5n m!re than 1' times in the past three years they have stated using 3ra#le CRM system)
•
&( The 3ra#le CRM system has enabled *ngr! F!!ds t! dispense 5ith spreadsheets t! re#!rd and tra#7 in+!rmati!n) Cust!mer data is n!5 entered and st!red in a #entral database% eliminating the need +!r repetitive manual entry and ensuring the a##ura#y and #urren#y !+ in+!rmati!n) The system als! pr!vides a single% #!mplete #ust!mer hist!ry hist!ry%% 5here 5here previ! previ!usly usly transa transa#ti #ti!n !n and pers!n pers!nal al detail detailss 5ere 5ere disper dispersed sed !ver multiple spreadsheets)
•
9ith 3ra#le l!!7ing a+ter the system +!r them% the #han#es !+ err!rs are less and i+ any issues d! #!me up% they 7n!5 they #an be res!lved >ui#7ly% >ui#7ly% as they epand the use !+ the s!luti!n% they 7n!5 they #an #!unt !n 3ra#le t! guide them thr!ugh the pr!#ess)
%ogistics 8 1istri$ution at Engro Foods#
Manu+a#turer *ngr! F!!dsG
Distribut!rs
R e ta ile r s
Final C!nsumer
The sales !+ *ngr! +!!ds- pr!du#ts are divided int! : 1) rim rimar ary y Sal Sales &) Se#! Se#!nd ndar ary y Sale Saless rimary Sales re+ers t! the sales !+ the bat#hes !+ pr!du#ts by the manu+a#turer t! the
distribut!rs. Secondary Sales re+ers t! the sales by the distribut!rs t! the retailers +r!m 5here 5here the g!!ds are eventuall eventually y s!ld s!ld t! the ultimate ultimate #!nsumer #!nsumer)) S! *ngr! *ngr! F!!ds F!!ds is +!ll!5 +!ll!5ing ing the tradi traditi! ti!nal nal #hannel #hannel !+ distri distribut buti!n i!n that inv!lv inv!lves es s!me s!me interm intermedi ediari aries es bet5een the trans+er +r!m pr!du#er t! the #!nsumer)
&6 *ransportation )andling at EF%
The ra5 mil7 is transp!rted +r!m the mil7 #!lle#ti!n #entre t! the manu+a#turing plants via insulated tan7ers) The insulated tan7ers maintain the temperature !+ mil7 ar!und +!ur degrees Celsius) The reas!n 5hy the tan7ers are insulated is t! prevent the mil7 +r!m getting h!t in the summer !r +reeze in the 5inter) The re+le#ting sur+a#e !+ the tru#7s als! pr!vides pr!te#ti!n against in+rared rays and redu#es the degree d egree !+ heat !n the tan7) Als! the #!!l temperature st!ps the pr!du#ti!n !+ ba#teria 5hile the mil7 is transp!rted !ver l!ng hauls t! the manu+a#turing site) 4!rmally the #apa#ity !+ the regular tan7ers used +!r the transp!rtati!n !+ mil7 +r!m the mil7 #!lle#ti!n #enter t! the plant varies bet5een 1'%''' and $6%''' liters) The transp!rtati!n +leet at *ngr! F!!ds is partly !5ned and partly #!ntra#ted that is they ma7e use !+ third party pa rty l!gisti#s) M!re!ver% the transp!rtati!n r!utes +r!m mil7 #!lle#ti!n #enters t! the manu+a#turing sites at Sahi5al and Su77ur are designed in a 5ay t! av!id !ver !verla lapp ppin ing g !+ r!ut r!utes es 5hi# 5hi#h h !the !ther5 r5is isee 5!ul 5!uld d add add up t! the the in#r in#rea ease sed d #!st #!st !+ transp!rtat transp!rtati!n) i!n) The ra5 mil7 is n!rmally n!rmally transp!rted transp!rted bet5een +!ur t! si h!urs t! av!id l!ss !+ >uality) 1istri$utors *ransportation 3n average% every alternate day 3lper Mil7 tru#7 arrives at ea#h 5areh!use +r!m the
Su77ur and Sahi5al +a#t!ries and is distributed in the same am!unt t! the distribut!rs all !ver a7istan) F!r !utb!und l!gisti#s tru#7s are used) They have 'I dedi#ated +leets J &'I !pen tru#7ing espe#ially +!r the n!rthern areas !+ a7istan) 3utb!und l!gisti#s #!n#erned +inished mil7 m!vement +r!m manu+a#turing plant t! the 5areh!use and t! distribut!rs) There are $ 5areh!uses !+ 3lpers:
&. 1) Su77ur &) Sahi5al $) Ra5alpind pindii Integrated %ogistics
*ngr! F!!ds a7istan ma7es sure that their pr!du#t namely 3lpers is available% n! matter 5here y!u are in a7istan) They integrate pr!#esses +r!m the +arm t! mar7ets% and ensure pr!du#ts are delivered t! y!u at the right time% at the right pla#e and in the right >uantity) 2!gisti#s 2!gisti#s net5!r7 is thus #!mpletely #!mpletely !uts!ur#ed) !uts!ur#ed) EF% d! have their !5n distributi!n net5!r7 but transp!rtati!n servi#es are all !uts!ur#ed) In$ound %ogistics •
F!r inb!und l!gisti#s l!gisti#s dedi#ated dedi#ated l!ng vehi#les are used) ,nb!und l!gisti#s l!gisti#s #!n#erns ra5 mil7 transp!rtati!n t! the plant)
•
Ra5 mil7 #!mes +r!m the dairy +arms t! the mil7 #!lle#ti!ns #enters 5hi#h are (' in t!tal J are l!#ated in di++erent villages 5here s!me >uality #he#7s are #!ndu#ted t! ensure the mil7 >uality% i+ it-s up t! the mar7 than it is st!red% till it rea#hes the ;%''' liter #apa#ity 5hi#h is than #!lle#ted by dedi#ated spe#ialized vehi#les t! transp!rt it t! the plant +!r pr!du#ti!n)
•
3n#e the vehi#le rea#hes the plant premises% !n#e again a >uality #he#7 is repeated be+!re emptying the #!ntainer)
Mil" Collection from Various Cities of Sindh 8 un+a$ •
2a7hi)
•
Ahmed pur east)
•
Rani pur)
&/ •
4a5ab shah)
•
Dhar7i)
•
Dh!7ri
•
R!hri and Sahi5aal)
&ut$ound %ogistics#
3n average% every alternate day 3lpers Mil7 tru#7 arrives at ea#h 5are h!use +r!m Su77ur and Sahi5aal Sahi5aal +a#t!ries% +a#t!ries% and is distributed distributed in the same am!unt t! the distribut! distribut!rs rs all !ver the a7istan) F!r !utb!und l!gisti#s tru#7s are used) They have 9:; dedicated fleets J <:; open truc"ing espe#ially +!r the n!rthern areas !+ a7istan) a7istan)
3utb!und l!gisti#s #!n#erns +inished mil7 m!vement +r!m manu+a#turing plant t! the 5areh!use J t! distribut!rs) There are $ 5areh!uses !+ !lpers:
Su77ur M!ther 5are h!useG
Sahi5aal M!ther 5are h!useG
Ra5alpindi Central 5are h!useG
Capacity &f =: feet *ruc"# Si'e of item 1 liter &6' ml 1)6 liter 6'' ml
!o. &f cartons ;$( 166& ;' 1(;/
The #!st !+ d!5n5ard l!gisti#s Su77urG +!r the #!mpany is #heaper in #!mparis!n t! the up5ard l!gisti#s Kara#hiG) Sin#e !pen tru#7s return empty !n#e the pr!du#t rea#hes the Kara#hi 5areh!use)
& 1istri$ution !etwor"s •
3lpers +!#using !n every ma"!r #ities !+ a7istan)
•
The distributi!n is !uts!ur#ed)
•
3lpers have &'' distribut!rs all !ver a7istan)
A##!rding t! the distributi!n% a7istan is divided int! three ge!graphi#al z!nes and then in +urther Regi!nal Sales 3++i#es) •
4!rth Z!ne
•
Ra5alpindi)
•
esha5ar
•
Central Z!ne
•
2ah!re
•
Eu"ran5ala
•
Multan
•
S!uth Z!ne
•
Kara#hi
•
Hub
•
un"gur
•
4a5ab shah
e,erse %ogistics Shelf %ife of &lpers Mil"#
&; •
/1 days
eturn olicy of &lpers Mil"# •
3lpers Mil7 has an e++i#ient return p!li#y +!r invent!ry in #ase !+ an y de+e#t)
*very #art!n and item has assigned a #ertain bat#h number)
,+ any de+e#t has +!und in item !r #art!n in small >uantityG then the bat#h number !+ that item !r #art!n is n!ted and disp!ses the de+e#ted item right !n there and i+ it is large number than it 5ill ta7en ba#7 by the same delivery tru#7 5h! dispat#hes the !rders t! the distribut!rs)
3n#e the large number !+ de+e#ted mil7 is ba#7 t! the #!mpany% than it is drained
They have a n!rmal l!sses rate !+ ')(' I due t! de+e#ted Mil7)
ricing Methods>ricing Strategies at EF%
The *ngr! +!!ds &lper’s are s!ld in retail st!res% #!nvenient st!res% Departmental !utlets et#) The pri#ing meth!dsLstrategies are set by th!se the #!mpany sells t!) C!nvenient st!res% Departmental !utlets usually sell &lper’s at a +ied pri#e a##!rding pa#7 sizes) H!5ever% retail !utlet uses pri#ing meth!ds and pri#ing strategies 5hen selling *ngr! +!!ds 3lpers) ricing Methods#
C!mpet C!mpetiti iti!n= !n=bas based ed pri#in pri#ing g is used used by *ngr! *ngr! +!!ds) +!!ds) &lper’s is usually pri#ed bel!5% ab!ve !r e>ual t! its #!mpetit!rs pri#es) Dis#!unt pri#e is !++ered +!r &lper’s and !+ten !++ered mar7 d!5n during sale peri!ds and spe#ia spe#iall !##asi !##asi!ns !ns li7e li7e Ramadan Ramadan t! generat generatee sales sales and in#rea in#rease se pr!+it pr!+its) s) *F2 is pursuing the #!mpetitive pri#ing strategy +!r its pr!du#ts)
$'
$1
Competitor 4nalysis !estle Mil" a" Facilities
4estle has t5! mil7 pr!#essing plants 5hi#h are l!#ated at: 1) Shei7hupur pura &) Kabir5ala
Sourcing of Mil"
1) Dire#t Dire#t S!ur#es S!ur#es 5hi#h in#ludes in#ludes their their !5n dairy dairy +arms +arms &) ,ndire#t ,ndire#t S!ur#es S!ur#es 5hi#h in#ludes in#ludes mil7 mil7 #!lle#ti! #!lle#ti!n n #enters 5hi#h 5hi#h are +ive +ive hundred in in number)
Sourcing of ac"aging Material
a#7aging material is als! a ls! !uts!ur#ed +r!m Tetra a7)
In,entory )andling
4estle +!ll!5s #y#le invent!ry system) ,nvent!ry is als! st!red at 5areh!uses at Kabir5ala and Shei7hupura and !ne #entralized 5areh!use at Kara#hi) 8e#ause !+ its perishable nature% the invent!ry management ! + 4estle Mil7 is d!ne !n the F,F3 First in +irst !utG basis)
*ransportation
3utb!und l!gisti#s are #!vered thr!ugh transp!rting huge #art!ns !+ Mil7 a7 +r!m 4estle +a#t!ries in Shei7hupura and Kabir 9a 9ala la t! their 5areh!uses and then the dist distri ribut but!r !rss
deliv deliver erin ing g
the the
pr!d pr!du# u#ts ts t!
5h!l 5h!les esal aler erss
and and
reta retail iler erss
resp respe# e#ti tivel vely y)
$& Transp!rtati!n is d!ne mainly thr!ugh tru#7s 5areh!uses t! distribut!rs and pi#7 up vans +r!m there !n t! retailers)
Information )andling
ur#hasing tas7 is greatly +a#ilitated by standard ,SL,T in+rastru#ture% #!mm!n business appli appli#at #ati! i!ns ns and and best best pra# pra#ti ti#es #es%%
ricing
C!mpetitive based pri#ing is used m!stly in !rder t! #!mpete 5ith its #!mpetit!rs)
$$
ecommendations
1) T! build a regi!nal regi!nal 5are 5are h!use in in Kara#hi that that +ul+ills +ul+ills there there supply supply side gap gap J t! redu#e up5ard l!gisti#s #!st) &) *F2 is is n!t having its its !5n dairy +armsN +armsN it it largely largely #!lle#ts #!lle#ts l!!se l!!se mil7 +r!m +armer +armerss J ga5alas thr!ugh its (' mil7 #!lle#ti!n #enters% 5hi#h s!metimes is !+ l!5 >uality and impure be#ause they add vegetable !il t! mil7 t! get higher pri#es) *F2 needs t! have their !5n Dairy Farm s! that they #an meet the in#reasing demand as their mar7et share is gr!5ing by 1&I annually J t! have >uality mil7 pr!#urement as 5ell) $) *F2 is is dependent dependent up!n Tet Tetra ra a7 +!r the pa#7agin pa#7aging g !+ its entire entire dairy dairy pr!du#t pr!du#ts) s) Tetra a7 is the !nly !pti!n available t! 3lpers +!r pa#7aging be#ause it is having m!n!p!ly in the pa#7aging se#t!r in a7istan) Due t! this reas!n% Tetra a7 #an #harge them higher and it #!uld in#rease the pr!du#ti!n #!sts s! they need t! invest their +unds +!r having their !5n pa#7aging system) () They sh!ul sh!uld d epand their their brand brand p!rt+!li p!rt+!li! ! by invest investing ing in y!gurt y!gurt mar7et mar7et as their #!mpetit!rs are en"!ying it "ust be#ause !+ l!5 #!mpetiti!n their !ther5ise Mil7 pa#7 has its brand name in drin7ing mil7 mar7et !nly) S! it-s an !pp!rtunity +!r them t! grab J en"!y the +lav!r) 5.
Supply #hain sh!uld be m!re resp!nsive in the n!rthern regi!n 7eeping in vie5 the shel+ li+e and setting up m!re distributi!n p!ints in the rem!te parts !+ the n!rthern regi!n and t! redu#e the supply side gap and t! res!lve the issue !+ epired pr!du#ts)
