PLANT VISIT: MANAGING OPERATIONS AT THE IGLOO ICE-CREAM FACTORY
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Report on
PLANT VISIT: MANAGING OPERATIONS AT THE IGLOO ICE-CREAM FACTORY
Prepared for Professor Dr. Muhammad Ziaulhaq Mamun Course Instructor P501-Managing Operations
Prepared by Group-1 Group Member Tasmima Kashem Rida Abdullah Beshroon Afsary Muntasir Alam Saihad Shahid Rahman Deepan Kumar Das Faisal Mahboob Rahman Ahad Uddin Ahmed Zubayer Mahmud Hasan Muhibul Hassan Adil Riza-Ur-Rob Md. Mohiuddin Jahangir Noor Muhammad Tushan Ahsan Azhar Shopan Saifur Rahman
Roll Batch 09 47D Exchange Student 52 47D 02 47D 06 47D 10 47D 14 47D 21 47D 23 47D 33 47D 44 47D 45 47D 48 47D 54 47D 05 47E
Institute of Business Administration, University of Dhaka June 11, 2013 2|Page
June 11, 2013
Dr. Muhammad Ziaulhaq Mamun Professor Institute of Business Administration Dhaka University
Dear Sir: Subject: Letter of Transmittal
Here is the report on the “Plant Visit: Managing Operations at the Igloo Ice-cream Factory” that you told us to submit on June 11, 2013. We tried to utilize all the knowledge that we gained from our operations management and business communication courses to compose and write this report. This report looked at the plant location, manufacturing processes, forecasting techniques and inventory control system to name a few. In fact, most of the materials covered in our operations management course were used to analyze the facility. I hope sir that you will find this report to your liking. Thank you for your support and guidance. Sincerely,
Tasmima Kashem (on behalf of Group-1) Id: RQ-09 Batch: MBA-47D
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TABLE OF CONTENTS 1.0
INTRODUCTION .......................................................................................................... 7
1.1
Origin of the Report .................................................................................................... 7
1.2
Objectives of the Study ............................................................................................... 7
1.3
Scope ........................................................................................................................... 8
1.4
Methodology ...............................................................................................................8
1.5
Limitations .................................................................................................................. 8
2.0
COMPANY OVERVIEW .............................................................................................. 9
2.1
About Abdul Monem Ltd. ........................................................................................... 9
2.1.1
Vision ................................................................................................................. 10
2.1.2
Mission ............................................................................................................... 10
2.1.3
Core Values ........................................................................................................ 10
2.1.4
The AML Organogram ......................................................................................11
2.2
About Igloo Ice-cream Unit ......................................................................................11
2.2.1
Mission of Igloo Ice-cream ................................................................................ 11
2.2.2
The Historical Progress of Igloo ........................................................................ 11
2.2.3
Igloo‟s Organogram ........................................................................................... 12
2.2.3
The Different Types of Igloo Ice-creams ........................................................... 12
2.2.4
Customers .......................................................................................................... 13
2.2.5
Competitors of Igloo ice-cream: ........................................................................ 13
2.2.6
Distribution process of Igloo ............................................................................. 14
2.2.7
Price ................................................................................................................... 16
Price List of The Different Items of Igloo: ....................................................................... 16 3.0
THE PLANT VISIT: IGLOO ICE-CREAM FACTORY ............................................ 17
3.1
Location of Igloo-plant.............................................................................................. 17
3.2
Facility Layout .......................................................................................................... 17
3.3
Facilities provided inside the premises of the Igloo plant .........................................19
3.4
Manufacturing Process of Igloo Ice-cream: .............................................................. 19
3.4.1
Mix Unit .............................................................................................................19
3.4.2
Production unit ................................................................................................... 20
3.4.3
Freezing Process Unit ........................................................................................ 22
3.4.4
Raw materials..................................................................................................... 22
3.5
Inventory Process ...................................................................................................... 23 4|Page
3.6
Quality control process..............................................................................................23
3.7
New product development ........................................................................................ 23
3.8
Forecasting ................................................................................................................ 24
3.9
Planning..................................................................................................................... 25
3.10
Supply-chain process................................................................................................. 26
3.11
Inside the factory ....................................................................................................... 27
4.0
RECOMMENDATIONS .............................................................................................. 27
5.0
CONCLUSION.............................................................................................................28
6.0
REFERENCES .............................................................................................................29
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EXECUTIVE SUMMARY Igloo ice-cream is a SME business unit of the company Abdul Monem Ltd. It is the pioneer ice cream brand in Bangladesh, having started its operation in 1964 in Chittagong.Later, with the expansion of the market, a new factory was established in the Narayanganj Industrial area near the Dhaka-Narayanganj highwayin order to cater to the market demand. The facility is producing nearly 60,000 liters of ice cream per day which is distributed throughout the country. This report analyzed the operations management activities and processes at Igloo. Data collection was restricted to only the Igloo ice-cream manufacturing plant.Data was mainly collected using observational techniques and interviews of line and support employees. Secondary data was collected from the online webpage of Abdul MonemLtd. and the materials provided by the management at Igloo and Abdul Monem Ltd. Through this report, we focused on the entire production process of Igloo ice cream. The processing unit at Igloo has three different sub units- mix unit, production unit and freezing process unit. After completion of the producing different flavored ice-creams, all the icecreams are put into the unit called- IQF (Initial Quick Freezer). In this unit all the ice-creams are kept in -40 degree centigrade for 70 minutes. After the final production of ice-creams, the finished goods are kept in an inventory house under the temperature of -25 degree centigrade. Usually every finished ice-cream can be kept up to 4 days in this inventory house. The quality of the ice-creams is checked by testing random samples. Sample testing is done at every 15 minutes and/or other physical and/or sensory cues are also monitored to ensure the quality. Suppliers of Igloo provide for items ranging simple nuts coatings, and other basic raw materials to high tech ice cream processing machines. The main ingredients such as milk powder, nuts, chocolates, sticks, tetra packs, various essences and flavors are imported from Australia, New Zealand, UAE and Dubai. Machines are imported from Denmark, Italy and Switzerland. Usually, during summer season and in any occasion of festivals like as first day of Bangla new- year, the demand for the ice-creams remains high. On the other hand, during rainy days and winter season the production volume is comparatively lower. Considering all these facts the forecasting is done for the production in generally for the next five months. Within every three months all the inventories of raw materials are checked and prepare to place orders. The lead time for Igloo is 3 months. When the location of the Igloo plant was selected, the environment was clean and full of greenery – ideal for any food factory. However, since then, more industries were built in the neighboring areas. The wastes and off-gases from other industries quickly deteriorated the surrounding environment. The exhaust gases from other factories sometimes create fogs around the plant area. Such pollutions might have serious implications in the health standards of Igloo products. Thus, Igloo management should consider relocating the plant at a more hygienic location. Through this plant visit we gathered a lot of valuable experience.
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1.0 INTRODUCTION Operations management refers to the administration of business practices to create the highest level of efficiency possible within an organization. It refers to the set of management activities involved in planning organizing, leading, and controlling an organization‟s operations. Efficient operation management has a major impact on both the cost of producing products or services and how well the products and services are produced and delivered which has a major impact on the revenue coming into the organization. Operation management represents all aspects of the business process and connects them to create an efficient and capable course of action. The ice-cream industry in Bangladesh is quite well developed. Igloo ice cream is the leader in the local market that is populated by other prominent brands such as Bellissimo, Polar, Kwality, Savoy and etc. Igloo is a subsidiary of the Abdul Monem group of industries. AbulMonem is one of the top business establishments in Bangladesh. Although known for their construction business, they have made significant inroads in other industries such as bottling, ice cream, sugar refining to name a few. The ice cream industry is retailer dominated. Igloo has come to command the major slice of the market because it has an immensely strong distribution network. This report is dedicated to analyzing the level of excellence in operation management activitiesconsidering Igloo Ltd as the representative which is the most well known and establishment ice cream brand in the country.
1.1
ORIGIN OF THE REPORT
This report has been compiled in order to satisfy the essential requirement to pass the operations management course under Professor Dr. Mohammed Ziaulhaq Mamun. The basic purpose of this report and the visit to the Igloo manufacturing facility is to give future managers a basic understanding of how operations management principles and activities perform in real life and their importance.
1.2
OBJECTIVES OF THE STUDY
Broad objective To understand the management of operations at the Igloo manufacturing plant Specific objectives
To gain an insight into the reasons behind the plant location and facilit y layout
To understand the ice cream manufacturing process
To ascertain the machines used in the manufacturing process
To determine the forecasting and time planning systems used at Igloo
To determine the inventory system used at Igloo
To understand the quality control process and system at Igloo
To gain an overall view of the supply chain management activities at Igloo 7|Page
1.3
SCOPE
This report only analyzed the operations management activities and processes at Igloo. Data collection was restricted to only the Igloo icecream manufacturing plant situated in the Narayanganj Industrial area near the Dhaka-Narayanganj highway. This report did not analyze the activities and operational processes of other facilities owned and operated by Igloo.Moreover, Igloo happens to be a subsidiary of Abdul Monem group of industries. Therefore, this report also did not analyze the activities at other strategic business units of the Abdul Monem group.
1.4
METHODOLOGY
Since this report is mostly based on data gathered from visiting the Igloo manufacturing facility, exploratory research technique was used to compile this report. The authors of this report mainly gathered data using observational techniques and interviews of line and support employees. Secondary data was collected from the online webpage of Abdul Monem and the materials provided by the management at Igloo and Abdul Monem Ltd.
1.5
LIMITATIONS The researchers were inexperienced Duration of plant visit was limited so the researchers could not accumulate enough data to make a comprehensive report The employees at Igloo were undertaking cleaning and sanitization procedures during the plant visit and hence were not very helpful for t he majority of the visit The researchers mostly had to interact with the human resources director at Igloo who had limited operational management knowledge Some employees were reluctant to divulge information pertaining to the manufacturing process, capacity of the plant and the ingredients used to make the ice cream. The researchers were not able to inspect the entire facility
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2.0 COMPANY O VERVIEW 2.1
ABOUT ABDUL MONEM LTD.
Abdul Monem Limited (AML) is one of the leading diversified business conglomerates in Bangladesh. It was established in 1956. Since its inception, it has successfully faced the challenges of almost six decades of political turbulence, economic instability and sociocultural changes as well as the present realities of the Bangladeshi business environment. AML started their operations as a construction contractor and soon became a trusted name in the construction industry. They soon earned a reputation for their quality. Abdul Monem believes in being the trendsetter that others would emulate or follow. For 56 years Abdul Monem Limited has successfully accomplished numerous projects including those aided by the World Bank, Asian Development bank, Japan Bank for International Cooperation and Islamic Development Bank. The core strength of the organization has been their capacity to gather the resources to complete infrastructure projects on a grand scale thus proving their capability to sustain long development periods and to bear the risks associated with such projects. AML has developed a wealth of experience in the infrastructure and development project fields and has been able to meet international standards of quality and service. Abdul MonemLtd. consists of the following subsidiaries: 1. Construction Contractors for the Roads & Highways, Bridges & Culverts, High-rise Buildings, Factory Buildings, Flood Embankment, Hydraulic Structures, Operation Maintenance & Toll collection. 2. Bottler of Coca-Cola, Fanta, Sprite, Sunfill Mango Juice &Kinley Drinking Water. 3. Manufacturer of Igloo ice cream 4. Manufacturer of AmoMilk liquid pasteurized milk. 5. Manufacture of Igloo Ghee. 6. Trading & distributing product of Danone Brands. 7. Abdul Monem Foundation 8. AML Trading & Distribution Unit 9. Igloo Foods Ltd. 10. Abdul Monem Sugar Refinery Limited 11. AM pharmaceuticals Abdul Monem currently employs around five thousand employees and it is one of the fastest growing firms in the country. AML has high hopes for the future. Under the dynamic and visionary leadership of its owners, AML strives to have a positive impact on Bangladesh. The following table shows AML at a glance:
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Name of the Company/Group
: Abdul Monem Ltd.
Year of Inception
: 1956
Form of Business
: Private Limited Company
Type of Business
: Manufacturing, Constructing, Trading, and Service oriented
Market
: Whole Bangladesh
Customer pattern
: All classes of people especially middle
Total No. of Subsidiaries
: 11
No. of Employees
: Around 5,000
Location (Head office)
: Monem Business District 111 BirUttam CR Dutta Road, Sonargaon Road, Dhaka. E-mail:
[email protected] Web: www.amlbd.com
2.1.1 VISION To become a world class business venture committed t o achieving the highest quality 2.1.2 MISSION “To make continuous improvement in our business policies and procedures to achieve the highest quality work for the betterment of society and to achieve cost reduction through integration of technology at all levels” 2.1.3
CORE VALUES
F or our customers
To become most caring by providing the quality product efficient service in every area of our business F or our employees
By promoting the well-being of the members of the staff F or our community
By assuming our role as a socially responsible corporate entity in a tangible manner through close adherence to national policies and objectives
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2.1.4
THE AML ORGANOGRAM
2.2
ABOUT IGLOO ICE-CREAM UNIT
Abdul Monem Limited is manufacturing and marketing Igloo ice cream, the country‟s leading ice cream brand. Igloo is the pioneer ice cream brand in Bangladesh, having started its operation in 1964 in Chittagong. Later, with the expansion of the market, a new factory was established in Shampur Industrial Area in Dhaka in order to cater to the market demand. Presently, Abdul Monem Limited uses state of the art technology for manufacturing ice cream. Actually, Abdul Monem Limited is the first firm inSouth Asia to introduce modern technology for manufacturing ice cream. The facility is producing nearly 60,000 liters of ice cream per day which is distributed throughout the country. 2.2.1 MISSION OF IGLOO ICE-CREAM To find the purest and finest ingredients in the world and craft them into the best ice-cream 2.2.2 THE HISTORICAL PROGRESS OF IGLOO The following timeline shows how Igloo eventually became the market leader since its inception in 1964 in Bangladesh.
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1964: Igloo started large scale organized approach under K Rahman & Co. Ltd. 1965: Igloo opened up the first ice-cream parlor in Dhaka. 1971: Igloo was nationalized by the government of Bangladesh after liberati on. 1972: In June Igloo was handed over to Bangladesh Sugar & Food Industries Corporation. 1983: Abdul Monem Ltd. acquired Igloo under privatization policy. 1996: In September, Igloo organized a massive marketing campaign 2005 onwards: Igloo leads the market with about 65% market share ahead of Polar, Kwality, and other competitors. 2.2.3
IGLOO‟S ORGANOGRAM
2.2.3 THE DIFFERENT TYPES OF IGLOO ICE-CREAMS There are about 70 different types of Igloo ice -creams in the market and some are as follows:
Chocobar
Mega
Cornelli Classic
Cornelli 2 in One
Macho
Mini Choc
Shell & Core
Kulfi
Snowball
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Panda
Clown
Lolly – Orange, Lemon
ShahiKulfi
Cup – Vanilla, Strawberry, Mango
Party Time
Ripple Cake
Vanilla
TuttiFrutti
Pralin
Pistachio
Ripple
Coffee
Diet Vanilla
Igloo is the leader in the Bangladeshi market. Although it is not the first ice cream company to operate in Bangladesh, it has ever since its inception captured the hearts and minds of its target markets. However, the dominant position of Igloo is under threat. New manufacturers are entering the market place with new and improved offerings that threaten to dethrone Igloo‟s top position in the market place. 2.2.4 CUSTOMERS Being the major source of survival and profit, customers form the most important component for an organization like Igloo. Igloo considers customers as being their life-blood of survival and is taking the maximum innovative efforts that can be utilized for utmost customer‟s satisfaction. Customers here can be segmented to family, kids, teenagers of high end, mid end and low end of the market. Igloo operating in such ever-changing world of tastes and preference pays heed to customers‟ choices and their attitudes. They, very keenly take on customers‟ advice, try and amend as well as add new dimension to their business in order to ensure survival in this highly competitive industry. 2.2.5 COMPETITORS OF IGLOO ICE-CREAM: There is a potential market of ice-cream in our country. As Bangladesh is a summer seasoned country, the people are very keen to consume ice-creams of all ages. Although ice-cream business is very profitable and opportunity to sustainability is very high, there are not much competitors of Igloo in the market.
The prime competitors of igloo ice-creams are: Polar Kwality Savoy 13 | P a g e
From the following pie-chart we can see that the market share is mostly covered by Igloo icecream near about 63%, which indicates that, Igloo is capturing the most profit from the icecream business sector.
Ice-cream market share in Bangladesh 1 10
2 Igloo
24
Polar 63
Kwality Savoy Others
The above figure shows the total ice-cream market in our country and the corresponding market shares of different branded ice-creams. 2.2.6 DISTRIBUTION PROCESS OF IGLOO Distribution mission: “Reaching our target consumers in the most efficient and effective way by becoming benchmark supplier in the ice cream industry, within strategic channels in every market place where we do business.”
The main function of the distribution unit of Igloo is to cr eate a sequence of effective network so that an important strategic edge over competing channels is created and ensure a continuous flow of its products to the ultimate consumers, the target market. The activation of the distribution channels proceeds from their factory at Shampur in Dhaka and ends at the retail outlets stretched all over the country with a long fleet of refrigerated vans. After production, ice cream products are stored at the central warehouse of the factory at a temperature between -30 to -35 degree centigrade where these are stored in a Store Keeping Unit (SKU) and from there they are distributed through three effective distribution systems –
Direct Distribution System (DDS)
Redistribution System (RDS)
Super Distribution System (SDS)
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Direct Distribution System (DDS): The following way Igloo plans to cover the whole country and each direction. Following is a list of areas they segmented as zones to deliver:
Dhaka Chittagong Comilla Khulna Rajshahi
: Covering the Dhaka and adjacent sub-base markets. : Covers the South and South West part of the country. : Covers the Western part of the country. : South and South East part of the country. : Northern part of the country.
Apart from that Igloo also operates through ninety-five trolleys for extending its reach to various consumers at different locations as schools, alleys, streets, parks etc. Also shopping malls as One Stop Mall in Rapa plaza, Agora in Rifles Square, Stop and Shop as well as departmental stores as Yusuf, Needs, Almas contains Igloo‟s freezers. Its network also covers lanes and by lanes through appointing local distributors and dedicated sales teams to accompany their freezers. Direct Distribution System uses „Freezer On Wheeler (FOW)‟ to distribute the products to the different operational centers. FOW consists of large refrigerated vans with temperature under – 200 centigrade and strict regularity is maintained to ensure proper temperature levels so as not to cause any deterioration in the quality of ice cream. DDS is applicable mainly for city-areas, and roads where one can easily access the retail shops by means of FOW. The DDS network is spread over six regions of the country. In Dhaka, Gulshan, Banani, Dhanmondi, Uttara, Baily Road, Mir pur Road, and some areas of Mohammadpur falls under the DDS network. In these areas FOW supplies the retailers with the required lot of ice-creams. Each retail shop has their own Dealer Record Cards (DRC) through which they are graded as A plus, B plus, C plus retailers and through which they assess whether to provide cash discounts, volume incentives scheme or some other means of discounts. Moreover, Igloo provides retail shops with attractive deep freezers containing logo of different ice cream so as to ensure proper storage and display of the products. Chittagong covers south and southwest parts of the country and due to its status as national‟s business capital, Igloo puts high emphasis in distributing its products to some of the retail outlets through DDS. In Rajshahi, Barishal, Khulna, Comilla and Chittagong, Igloo uses the DDS system only just to take its products to the different depot of the regions where Igloo has their warehouse. Every sales officers of the warehouse covers a number of areas, distribute the goods themselves to the distributors. Distributors are given a 5% commission as sales incentives to take the goods to the shop on behalf of Igloo. Igloo also operates through the trolleys popularly known as tuntuni vans , which uses RDS for extending its reach to consumers at the furthest points. The trolleys are operated near 15 | P a g e
schools, universities, alleys, parks etc. and play rhythmic music to attract the consumers. These are very colorfully decorated with Igloo umbrella and the pullers wear specific uniforms. Igloo is the first to introduce and operate these trolleys in Bangladesh for any Fast Moving Consumer Goods (FMCG). Moreover trolleys are used for places where FOW is unable to operate. Within Dhaka, Igloo provides RDS facilities in Old-Town, Zikatola, Badda, Nakhalpara, Khilgaon, and some areas of Mohammadpur and Uttara. In Sylhet, a self-created concept known as Super Distribution System (SDS) is put into practice. In this system, the super distributor holds the title of the product and is given the sole responsibility of selling only Igloo‟s products. Super distributors are given a 7% commission and they distribute products to retailer and wholesale rs on their own accord. 2.2.7 PRICE Price List of The Different Items of Igloo: ITEMS
PRICE
Chocobar
12/-
Mega
15/-
Cornelli Classic
17/-
Cornelli 2 in One
17/-
Macho
25/-
Mini Choc
10/-
Shell & Core
10/-
Kulfi
5/-
Snowball
6/-
Panda
10
Clown
12/-
Lolly – Orange, Lemon
8/-
ShahiKulfi
10/-
Cup – Vanilla, Strawberry, Mango
8/-
Party Time
125/-
Ripple Cake – 1 liter, 2 liter
140/-, 200/-
Vanilla – 0.5 liter, 1 liter, 2 liter
45/-, 80/-, 150/-
TuttiFrutti – 1 liter
150/-
Pralin – 1 liter
150/-
Pistachio – 1 liter
150/-
Ripple - 1 liter
100/-
Coffee – 1 liter
150/-
Diet Vanilla – 1 liter
100/-
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3.0 THE PLANT V ISIT: IGLOO ICE-CREAM F ACTORY Igloo ice-cream is a SME business unit of the company Abdul Monem Ltd. It is a profitable organization. The scope of ice cream market in Bangladesh is huge. On an average monthly Igloo sells 60,000 kg of ice-creams.
3.1
LOCATION OF IGLOO-PLANT
Initially the plant was located in Chittagong. It was then relocated to Shampur at Dhaka to get a hold of a better distribution channel. Advantages:
The labor supply is available and easy to avail. Initially the environment was healthy and greener which was helpful for ice-cream production The large area facilitates to cover many other subunits inside the factory premises. The distribution process is easier as the plant location is situated at the center point of the country. The area Shampur is not residential area so that the environmental affect is not that much done to the people. The electricity supply is very continuous here and the fire service is not that much far away from the plant location. The area is not over crowded, so the journey of the distributers is not that much timeconsuming to get the deliveries. Presence of river Shitolokkha nearby ensures necessary supply of water.
Disadvantages:
3.2
As the location is very good for production plants, many factories grew very rapidly in the last few years. The wastes and off-gases from other industries quickly started deteriorating the surrounding environment. The smokes emit from the chimneys are harmful for the food ingredients of ice cream. The air is so polluted that air-conditioners of Igloo plant require frequent repairing as they get clogged due to excessive dust in the air . The roads surrounding the plant location are very mal constructed whichis now causing clogging roads with rain water. The roads are also risky to ply the heavy traffics on them. The environment is remaining no more greener which is affecting the quality of the ice cream produced
FACILITY LAYOUT
The following page shows the facility layout of the Igloo Ice-cream Factory.
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IGLOO’S FACILITY LAYOUT
Exit Distribution Centre
Medics Mix Unit
Effluent Treatment
m o o R e c ) Raw n s r Materials e r o o e l f f n r o e C p Quality d p n U Control, a ( s e c i f f O
Inventory
-25°C
Production & Packaging Unit
Low Temp
Entrance NH3 Refrigeration Plant
Security & Fire Dept.
Security Housing
Distribution Manager
VAT
Maintenance
Boiler
Generator
Engineers
g n i h s Sales Workers Dressing a W st (1 Floor) Room
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3.3
3.4
FACILITIES PROVIDED INSIDE THE PREMISES OF THE IGLOO PLANT
Quality control and R&D sector
In-house physicians for the workers
Microbiological counting is done to check the air contamination inside the factory
The cleanliness of the workers is confirmed before entering into the factory
Plastic boxes and the paper-labels are produced inside the premises.
Fire fighting unit
A separate milk unit
Distribution unit
Production unit
Engineering unit
Chocolate unit
Finance unit
HR and Admin unit
MANUFACTURING PROCESS OF IGLOO ICE-CREAM:
There are Chiller Substances inside the factory, which are machines that produce ammonia to chill the temperature inside the tanks and inventory house. The ice-cream processing unit has three different sub units – the Mix Unit, the Production
3.3
FACILITIES PROVIDED INSIDE THE PREMISES OF THE IGLOO PLANT
Quality control and R&D sector
In-house physicians for the workers
Microbiological counting is done to check the air contamination inside the factory
The cleanliness of the workers is confirmed before entering into the factory
Plastic boxes and the paper-labels are produced inside the premises.
Fire fighting unit
A separate milk unit
Distribution unit
Production unit
Engineering unit
Chocolate unit
Finance unit
HR and Admin unit
3.4
MANUFACTURING PROCESS OF IGLOO ICE-CREAM:
There are Chiller Substances inside the factory, which are machines that produce ammonia to chill the temperature inside the tanks and inventory house. The ice-cream processing unit has three different sub units – the Mix Unit, the Production Unit, and the Freezing Unit. The units are explained in the flowing pages with diagrams. 3.4.1
MIX UNIT
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At first, the initial ingredients, milk and sugar are mixed to make the proper mixture of sweet milk. For that, milk is pasteurized in a mixture tank which is labeled as TI-3000. The capacity of this tank is that, it can pasteurize 3000 kilogram milk per hour. For the milk mixing process powder milk is brought to make the ice-creams. After the mixture the milk is sent to the machine „Homogenizer‟, where milk is mixed with sugar in homogeneity-ratio. Basically the pasteurization and homogenization are done sequentially altogether. That means this is a single task consisting of two different parts. After this, the mixture of the milk and sugar is sent to the mother tank. The mixture is chilled here. There are three mother tanks each of which is having capacity of processing 2000 kilogram mixture of milk and sugar. The tanks are labeled as- HTST-3000. The temperature is kept less than 4 degree centigrade in these mother tanks. In total 6000 kg of mixture is processed here and the function of the mix unit is transferred to production-unit from here. 3.4.2
PRODUCTION UNIT
From the mix unit the homogenized mixture of milk and sugar is now transferred to the production unit. This unit is placed to the adjacent room to the mix unit. And the tanks are connected by pipe-lines. These pipe lines carry out the mixture from the tank to tank. In the production unit, there are eight different tanks. Three of which have a capacity of 24000 kg 20 | P a g e
each and the rest have 12000 kg. Usually, producing 24000 kg of ice cream is considered as a single batch. The mixture is at first placed in a tank where flavor and color is mixed to the mixture. In this process the tanks are labeled as- HOYER FRIGUS-12. In this addition process the temperature is kept at less than 4 degree centigrade. After this tank, the temperature is reduced to -5 degree centigrade so that the ice-creams come to solid forms. Here comes the most elementary flavor of Igloo ice-cream which is vanilla flavor. At the end of this tank vanilla-flavored ice-cream is poured into the plastic box of 1 liter and ½ liter. This task of pouring the ice-cream is done manually. All the other tasks such as sealing and tagging are also done manually comprising of 5-membered team for this vanillaflavored ice-cream box. The diagram below shows the process.
Like the similar process of producing vanilla ice-cream, other flavored ice-cream such as „Double Sandy Doze‟ is prepared. For this flavor, the mixture from the mix unit is transferred to another tank where the required flavor and the color is mixed. Here two different pipe-lines bring two different flavored creams: one is caramel and the other is vanilla in to the box of the Double Sandy Doze ice-cream. This pouring process is done through automation process. After the pouring the addition of nuts and other labeling, tagging tasks are done manually. Here the temperature of the tank is also kept at -5 degree centigrade. Another automation process is done to produce the bar-formed ice-cream of Igloo. All sorts of bars like as Chocobar, Malai etc. are produced through this machine. Through this process
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if any bar is cracked than that piece is destroyed and isn‟t included in the production. For this process the machine used is labeled as- „ROLO-27‟. Another machine is used to process the vanilla-flavored cup ice-cream. The process of pouring is done by automation. Again, tagging and packaging is done manually. 3.4.3 FREEZING PROCESS UNIT After completion of the producing different flavored ice-creams, all the ice-creams are now put into the unit called- IQF (Initial Quick Freezer). In this unit all the ice-creams are kept in -40 degree centigrade for 70 minutes. In this duration of 70 minutes the ice-creams become chilled down and become prepared to be delivered.
The diagram below shows how the freezing process unit works:
3.4.4 R AW MATERIALS The raw materials used in manufacturing the Igloo ice-creams are:
Skimmed milk which is imported from Australia
Igloo sugar produced by their own factory
Milk fat, vegetable fat imported from Malaysia
Stabilizer which is used for the body texture of the ice-cream
Glucose which is purchased from the local company Rahman Chemicals
Nuts, usually imported from USA 22 | P a g e
3.5
Peanuts are brought locally. Previously Igloo used synthetic food color but from the last one/two months they are using natural food color for the ice-creams. Additive flavor. But they use mango pulp for their mango-flavored ice-cream. Plastic they use for the boxes are purchased locally and the boxes are produced by their own. Chocolate
INVENTORY PROCESS
After the final production of ice-creams the finished goods are kept in an inventory house which is basically a vast deep-freezer. In that room, the finished ice-creams are kept under the temperature of -25 degree centigrade. Usually every finished ice-cream can be kept up to 4 days in this inventory house. The capacity to fill up the inventory house is maintained in that way. The diagram in the previous page shows the inventory process at the Igloo icecream factory after the ice-creams go through the freezing unit.
3.6
Q UALITY CONTROL PROCESS
Igloo delivers its commitment for quality for each product by maintaining Total Quality Management (TQM). All the raw and packing materials are procured from the best European sources. Strides Quality Control is done at every aspect of the manufacturing process form procurement of materials, blending, material flow, ice cream making, packaging, storing (at main warehouse), distributing and market shelving by the Quality Control Department. The quality of the ice-creams is checked by testing random samples. The Quality Control and R&D department in the premises of the plant examines the quality of the finished ice-creams and approves them. Sample testing is done at every 15 minutes and/or other physical and/or sensory cues are also monitored to ensure the qualit y.
3.7
NEW PRODUCT DEVELOPMENT
For the purpose of new product development, a team comprised of four members seat for a weekly meeting usually in the head office. There they discuss for the new market‟s entrants or any innovative flavor. Different Sales-structure of different flavors of Igloo ice cream is given in the following figure:
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3.8
FORECASTING
1. Method of forecasting Method of forecasting at Igloo is entirely manual and traditional. No software is used for forecasting. There is not even any specific time frame for forecasting. For forecasting, Igloo use bottom-up forecasting method. It generates the forecast at the lowest level of the forecast pyramid. The distributors forecast monthly/ weekly sales for each individual SKU (Stock Keeping Unit). Territory Sales Officer consults with the distributors across the country and decides how much each distributor must stock. After that, distributors place the orders and the Territory Sales Officers ensure that the orders reach the factory in time. 2. Safety Stock and Lead Time No specific amount of safety/ buffer stock is maintained. Decisions regarding buying and stocking up raw materials depends mostly on whims and past trends as no scientific method is being followed. Raw materials are kept in the inventory for around 2 months. Igloo maintains a lead time of 3 months. 3. Total Cost of Forecasting There is virtually no additional cost for forecasting as everything is done manually without using any special forecasting software. 24 | P a g e
Forecasting for producing a particular flavor is varied season to season. Usually during summer season and in any occasion of festivals such as first day of Bangla New Year, the demand for the ice-creams remains high. For this reason, the production for the ice-cream during this season is done in a high volume. During rainy days and winter season the production volume is comparatively lower. Considering all these facts the forecasting is done for the production in generally for the next five months. Within every three months all the inventories of raw materials are checked and prepare to place orders.
3.9
PLANNING
Though Igloo does not go through any formal forecasting criteria, they do some structured planning for production decision and raw materials purchasing decision. Planning is very crucial for any organization as it gives them direction of where they are headed for. It reduces uncertainty by forcing marketers to look ahead, by anticipating changes, by considering the impact of change and by developing appropriate responses. Furthermore, planning minimizes wastage and can set standards in controlling. Igloo is managed by developing three levels of plans – the short-term, medium-term, and long-term plans. Long-term plans: 1. To become one of the market leaders in the ice-cream industry. 2. To gain goodwill. 3. To expand its business domestically and internationally. 4. To ensure long-term existence by being profitable, successful and sustainable. 5. To make a worthwhile contribution to progress of the nation. 6. To increase the number of Igloo parlor in targeted prospective areas. Medium-term plans: 1. To provide the best services and highest quality products. 2. To respond effectively to the market demand. 3. To survive in the market by increasing profitability and growth. 4. To gain competitive advantage and to increase market share. Moreover to ensure the fulfillment of the overall company strategy, it focuses on a wide range of facilities in order to motivate employees, distributors and retailers to increase their performance. Short -term plans: 1. To introduce a more innovative range of ice cream. 2. To achieve responsiveness to the changing taste buds of the consumers crucial for survival in a highly competitive market. 3. To maintain their current level of profitability and efficiency. 4. To import quality raw materials from abroad. 5. To keep stocks of raw material so as not to hinder production. 25 | P a g e
3.10 SUPPLY-CHAIN PROCESS Suppliers of Igloo provide for items ranging simple nuts coatings, and other basic raw materials to high tech ice cream processing machines. Almost all ingredients are supplied by foreign suppliers. The main ingredients such as milk powder, nuts, chocolates, sticks, tetra packs, various essences and flavors are imported from Australia, New Zealand, UAE and Dubai. Machines are imported from Denmark, Italy and Switzerland. An important note on suppliers is made here by the Igloo‟s Marketing Manager. According to him, local suppliers are far less reliable than foreign suppliers both in terms of quality of goods and the kind of services they provide. Foreign suppliers are more reliable, professional and devoted to commitments. Such is its faith on foreign suppliers that Igloo imports all items though it is time consuming and there are costly import related formalities. The total supply-chain process for the Igloo ice cream step by step is described below: Step-1: Purchase request is proposed Step-2: Required department calls for RFP (Request for proposal) with quotation for the different ingredients/raw materials except sugar as it is purchased directly from Igloo sugar. Step-3: Then the quotation by the different vendors are evaluated Step-4: Management approves the least-quoted suppliers of raw materials Step-5: The LC is opened Step-6: Shipment is started just after the opening LC Step-7: Then raw materials are sent to factory Step-8: The final production starts Step-9: Finished products are kept in the inventory house where the ice-creams can be kept maximum 4 days before deliveries. If inventory house is filled up with the ice-creams then production remains closed till the inventories are delivered.
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3.11 INSIDE THE FACTORY The following observations were noted regarding the internal environment of the factory:
The floors were very slippery because of the water which is being used continuously to mix the milk powder. The workers working there were wearing apron, hair-covering cap, mask and hand gloves to protect the air from contamination of germs and bacteri a.
The rooms were so much noisy because of the running machines.
Every steps of producing ice-cream were being done in very synchronizing way.
The workers working at the inventory-house were wearing required jackets to be protected from the low temperature.
4.0 R ECOMMENDATIONS The following recommendation we have found to make Igloo prepare for future competitive market for ice cream industry:
The plant should be relocated to a more health, green and well-constructed areas and the surrounding area should be wider and cleaner. Instead of ammonia igloo should use other substance to chill the temperature of the room and the inside of the tanks. The full process of making ice cream for all flavors should be automated. Inside the factory the sound pollution should be reduced due to the noise from the running machines. The floor was so slippery that it can even create accidents for the workers. So the floors should be kept dry and clean. There should be a clear and structured forecasting technique to get more production prospects and more profit to avail. The supply chain and raw materials procurement should be handled more precisely to avoid the loss of opportunity to get quality full substances. The collection of wastage materials and ice-cream should be done more hygienically so that when those are put into the recycling process remain as healthier as fresh one. Man power should be lessen down, so that inside the factory hose the place is not over crowded. Each process should be done more synchronizing way. The capacity of the inventory house should be enlarged to avoid the over stock due to the bad weather like as sudden rain and cold weather. The workers should be prepared more hygienically to avoid the air contamination by germs. The waste disposal process should be done more carefull y so that it does not harm the entire environment.
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5.0 CONCLUSION Evidently by virtue of its unique product attributes, high quality, exquisite and mouthwatering varieties of ice creams, attractive and distinct packaging, Igloo has been able to ensure marketing excellence and enhance its competitiveness. Today‟s fiercely competitive environment compels Igloo to pursue the right set of pricing strategies, policies for effective segmentation and targeting, market oriented structures of distribution and retailing, which lies at the heart of a company‟s success. Moreover, with a view to achieving wide distribution network, it operates a system of RDS, DDS, SDS, maintains depots and warehouses to achieve a relentless effort to maintain its sales and distribution flow enables the company to achieve its desired goals. In its quest to create satisfying customer relationship and optimizing the performance of the entire system, Igloo has resorted to a system of timely distribution. This report basically focuses on the production aspects of Igloo and tries to give an analysis of Igloo in terms of manufacturing process, raw materials procurements, supply-chain maintenance and planning for production. We also tried to focus on the plant location of Igloo and discussed both the advantages and disadvantages of the factory location. We also recommended some essential steps that Igloo should take to get edge in future competitive market. The entire experience of visiting the Igloo plant was very good for all of us. We could get the opportunity to relate our learning with the practical work environment. The total production process observation helped us a lot to get the experience of having a complete concept of entire process of producing ice cream. We gathered a lot of valuable experience and orientation to the managerial skill to manage a whole plant as well. Already Igloo is the pioneer in the ice cream industry in our country. But due to future more new market entrants, Igloo should adopt more new strategies to cope up the threats. And the management of Igloo ice-cream is efficient enough to make the required change happen and adopt necessary steps accordingly.
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6.0 R EFERENCES Abdul
Monem Ltd. (n.d.). Retrieved June 08, 2013, https://sites.google.com/site/amliglooicecream/aml-group
About
Us. (n.d.). Retrieved June http://www.amlbd.com/main.php
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2013,
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Abdul
Monem
Ltd.:
Mamun, M. Z., & Ahsan, A. (2012-13). Operations Management. (K. Arefin, Ed.) Dhaka: Publishing Printing & Distribution Division (PPD). Shahed, M. R. (2013, May 21). Senior Manager (HR & Admin), Igloo. (Group-1, Interviewer) Taimur, S. (2013, June 2). National sales Manager, Igloo. (D. Das, & S. Rahman, Interviewers)
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