INTRODUCTION - PTC - Technology Solutions for Ongoing Product
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Transcript of Introduction ptc
OPERATIONS & PRODUCTION MANAGEMENTBBA VI-C
BAHRIA UNIVERSITY ISLAMABAD
PROJECT REPORT
Submitted to: Sir Tahir Masood
Submitted By:Muhammad AkilMuhammad BilalBilal SohaibHusnain KhanWaleed Ullah
i
TABLE OF CONTENTS
PHASE I..........................................................................................................................................1
INTRODUCTION...........................................................................................................................1
FACTORIES................................................................................................................................2
1. JHELUM.......................................................................................................................2
2. AKORA KHATTAK....................................................................................................2
INDUSTRY OVERVIEW...............................................................................................................2
ORGANIZATIONAL OVERVIEW...............................................................................................2
ORGANIZATIONAL STRUCTURE.........................................................................................3
CORPORATE STRATEGY............................................................................................................4
OPERATIONS STRATEGY...........................................................................................................4
COMPETITIVE PRIORITIES........................................................................................................5
PRODUCTION STRATEGY..........................................................................................................5
FORECASTING..........................................................................................................................5
PURCHASE OF TOBACCO......................................................................................................5
PACKAGING..............................................................................................................................5
PRODUCTION............................................................................................................................6
DIRECTIONAL STRATEGY.........................................................................................................6
VERTICAL INTEGRATION (BACKWARD INTEGRATION)..............................................6
PROCESS MANAGEMENT..........................................................................................................6
PHASE (I)....................................................................................................................................6
LEAF THRESHING DEPARTMENT....................................................................................6
PHASE (II)..................................................................................................................................7
1. PRIMARY MANUFACTURING DEPARTMENT.....................................................7
2. SECONDARY MANUFACTURING DEPARTMENT...............................................8
PROCESS CHOICES......................................................................................................................9
PROCESS FLOW DIAGRAM......................................................................................................10
MANAGEMENT OF TECHNOLOGY........................................................................................11
PRODUCTION TECHNOLOGY.............................................................................................11
RESEARCH AND DEVELOPMENT......................................................................................11
INFORMATION TECHNOLOGY...........................................................................................12
TOTAL QUALITY MANAGEMENT..........................................................................................12
INTERNAL FAILURES...............................................................................................................14
ii
EXTERNAL FAILURES..............................................................................................................14
PHASE – II....................................................................................................................................15
CAPACITY...................................................................................................................................15
CAPACITY PLANNING..........................................................................................................16
CAPACITY STRATEGIES......................................................................................................17
EXPANSION.............................................................................................................................17
CAPACITY REQUIRMENT....................................................................................................17
LOCATION...................................................................................................................................18
JHELUM FACTORY................................................................................................................18
AKORA KHATTAK FACTORY.............................................................................................19
LAYOUT.......................................................................................................................................21
CONCLUSION..............................................................................................................................23
RECOMMENDATIONS...............................................................................................................24
ACTION PLANS...........................................................................................................................25
BIBLIOGRAPHY..........................................................................................................................26
TABLE OF FIGURES
Figure 1: Organizational structure...................................................................................................3Figure 2: Process Choices Diagram.................................................................................................9Figure 3: Process Flow Diagram...................................................................................................10Figure 4: Process Layout Diagram PTC Jhelum...........................................................................22
iii
PHASE I
INTRODUCTION
Pakistan Tobacco Company (PTC) is one of the leading multinational companies
of Pakistan. It has the privilege being the first multinational company of Pakistan. PTC is
the part of trans-national British American Tobacco (BAT) Group which has been in this
business over 100 years now. BAT has its operations in about 180 countries with more
than 300 different brands.
Tobacco industry is one of the most important sectors of the economy of Pakistan. PTC
has become the major player in the industry by keeping thousands of people employed
and by contributing to annual GDP of Pakistan through large amount of taxes paid on
cigarette manufacturing and sales.
PTC started its operations 1947 right after the partition of sub-continent, by taking over
the business of the Imperial Tobacco Company that was incorporated in subcontinent
since 1926. In the beginning a channel production was setup in a warehouse in Karachi
which has capacity of producing 360 millions sticks per annum. Then after a certain
period PTC started its fully equipped factories in Jhelum and Akora Khattak.
Currently PTC has the capacity of producing about 35 billion sticks per annum. During
2006 PTC showed 12.8% growth in sales volume by selling 34.54 billion sticks. PTC is
the largest excise tax generator in the private sector in the country. In 2004 alone, PTC
paid the government close to Rs.16 Billion in excise and sales taxes.
1
FACTORIES
Currently there are two factories that are performing there operations under PTC. These
factories are named as Jhelum and Akora Factory.
1. JHELUM
PTC established Jhelum Factory in 1956 which started its operations in 1957. Jhelum is
located 100 kilometers in south from Islamabad. Initially the Jhelum factory was working
on single shift. Then in 1961 and 1970 it started working on second and third shifts
respectively. Currently there are 426 employees working in Jhelum Factory. Jhelum
Factory has capacity to produce 20 billion sticks per annum.
2. AKORA KHATTAK
Akora Factory started its operations in 1976. Akora Factory is situated 100 Kilometers in
North from Islamabad. A special thing about Akora Factory is that tobacco leaf is also
processed there. Akora Factory fulfills the requirement of local tobacco. It is also
working in three shifts same as in Jhelum Factory. Akora Factory has capacity to
produce about 20 billion sticks per annum.
INDUSTRY OVERVIEW
The tobacco industry is the source of revenues, employment and foreign exchange of
the country. The industry has to pay very high, excise and sales tax, while complying
with various strict rules and regulation of the Government. It contributes 46.7 billions in
2008/09 as central excise duty and sales tax. Despite its contribution to the economy
the industry is highly criticized for its negative impact on society.
ORGANIZATIONAL OVERVIEW
PTC provides itself in being the first multinational company to begin its operations in
Pakistan. Our parents company BAT (British American Tobacco) has been in business
for over 100 years, now with presence in over 180 countries. From being just a single
2
factory operation to a company which is involved in every aspect of cigarette production
from crop to consumer. We have to involve in one of the leading corporation in
Pakistan. We run two state of the art factories and employee more than 1700 people.
While indirectly providing livelihood to more than millions people who are involved in
various aspect of business. We are market leaders and contribute more than 30 billion
in excise duty and taxes to the Government. Our strategy reflects our vision being the
champion of growth, productivity, responsibility and a winning organization.
ORGANIZATIONAL STRUCTURE
3
Figure 1: Organizational structure
BRANDS OF PTC
DUNHILL BENSON & HEDGES GOLD LEAF CAPSTAN GOLD FLAKE EMBASSY
CORPORATE STRATEGY
PTC’s corporate strategy is to gain market leadership in terms of the following three
aspects:
Growth: The focus on competing in terms of their volume share that is the
amount of cigarettes being manufactured.
Productivity: In terms of productivity they believe and focus on effective utilization
of the given resources and reducing their waste.
Responsibility: PTC believes that it is their prime duty to carry out their business
activities ethically and morally keeping in mind the interests of all. They give high
priority to community services and health and safety issues.
OPERATIONS STRATEGY
The operation strategy is linked with their corporate strategy which is to maintain their
company with speed and flexibility to become the number one cigarette manufacturer
therefore in terms of operations they believe in producing with the least possible cost
and are continuously working on findings ways to further reduce it without compromising
on their quality in order to gain a competitive edge over its competitors. The strategies
of PTC are driven from Central Headquarters. PTC is fully integrated. Following are the
departments in operations which are inter-linked with corporate strategy: Security
Department, Material Management Department, Engineering Department, IT
department, Green Leaf Threshing Department, Primary Manufacturing Department,
4
Secondary Manufacturing Department, Filter Rod Department, and Quality Control
Department.
COMPETITIVE PRIORITIES
Quality(due to tax issues, smuggled item available the cost cannot be reduced therefore
the compete with their competitors on the basis of quality)
cost (PTC believes in smart spending and aim to gain value addition from each penny
spent)
Time
Flexibility
PRODUCTION STRATEGY
FORECASTING
PTC production is on the basis of six month forecasting by market department,
marketing department makes their plan and they forecast about different brands e.g.
Benson, Gold leaf etc.
PURCHASE OF TOBACCO
PTC makes future ten year planning for tobacco because they have to look at the
different perspective of nature. For example recent flood in country. PTC needs a dust
free area like Swat, Mardan and Mansehra. But due to war in those areas they have
already started growing tobacco near Gujrat and Mianwali for their future requirements.
PACKAGING
PTC imports gums, wrapping sheets and other packaging material from Thailand,
Malaysia, Japan and Philippine and handover to factory. After all the packaging process
is done in the factory.
5
PRODUCTION
Headquarter instructs through supply chain manager and build MPS (Master Planning
Schedule) to factory manager in Jhelum. They produces as their clients requirements.
E.g. PM house, Navy according to their needs.
DIRECTIONAL STRATEGY
VERTICAL INTEGRATION (BACKWARD INTEGRATION)
PTC is in backward integration as it has grown its own tobacco cultivation field, hence
procuring the raw material from its own resources. But still it is in a limit scope. As the
cultivation place changes, the taste and color of tobacco also changes. Therefore they
have done some contract with farmers on standing fields basis i.e. the whole field is
purchased from farmer before it is harvested by estimating the yield of field.
PROCESS MANAGEMENT
PHASE (I)
LEAF THRESHING DEPARTMENT
“Process and deliver quality tobacco satisfying customer demands at minimum supply
chain cost.” Although tobacco is grown throughout the country, the primary source of
this integral raw material is the NWFP where soil and climatic conditions suit tobacco
cultivation the most. The province has been the focal point tobacco-related activities
and produces around three-fourths of the tobacco leaf grown in the country. The
province grows the three most widely used types of tobacco namely, Flue Cured
Virginia (FCV), Burley and Nicotiana Rustica (White Patta).
In 1948, PTC pioneered the cultivation of Virginia tobacco in Pakistan with an average
yield per hectare of 861 kg. Through continuous efforts and the hard work put in by our
contracted farmers, the yields have increased significantly to 2,400 kg/hectare. Prior to
6
that native varieties like Jati & Motihari were cultivated mainly in the eastern part of
Pakistan (Bangladesh). All the Virginia tobacco was imported from the USA & India.
Flue Cured Virginia tobacco is now the most widely grown and widely used type of
cigarette tobacco in Pakistan and the total production of this high value commodity has
increased from 23.8 million kgs in 1967-68 to 66 million kgs in 2007. Pakistan is now the
7th largest producer of FCV in the world.
The current tobacco production in the country exceeds 100 million kilograms per year,
although what is perhaps more important is the types of tobacco grown in the country.
Once tobacco is planted, it undergoes a myriad of processes as it moves through the
supply chain which converts it into a consumable product worthy of pride.
PHASE (II)
There are two departments lie under process department.
Primary Manufacturing Department
Secondary Manufacturing Department
Following is the process performed by each department.
1. PRIMARY MANUFACTURING DEPARTMENT
This department is generally known as PMD. The main function of this department is to
produce the blend of tobacco that is required for the manufacturing of a cigarette stick.
Different blends are created for each brand, the tobacco is processed and at the end of
this stage the dust from the tobacco is separated. Different blends (recipe of brand) for
each different brand like Gold Leaf, Gold Flake, and Capstan etc. are mixed with their
flavors. Blend of Tobacco is processed in shifts; in each shift 5000 kilogram of Tobacco
blend is produced.
PMD receives stem and Leaf (Lamina) separately from Leaf Department and process
them separately. During the process steam and different flavors added for different
blends of Tobacco. At the end Stem and Leaf are mixed with a specific ratio of 80:20.
7
After this the blend of Tobacco that is ‘Cut Tobacco’, is stored in Cut Tobacco Store.
2. SECONDARY MANUFACTURING DEPARTMENT
This department is commonly known as SMD. SMD is further divided into three sub-
departments are that are;
CIGRETTE MAKING DEPARTMENT
CMD receives blend of Tobacco from Cut Tobacco Store and processed it to form a
cigarette stick. The process of cigarette making is done through fully automated
machines. “Protos” is the highest capacity machine that is installed in PTC Jhelum
Factory. It has capacity of producing 10000 sticks per minute. It has ability of checking
the filter, leakage, tobacco, length, level of humidity etc. The machine rejects if it finds
any error in length, width, etc.
When a cigarette stick is produced it is transferred to Cigarette Packing Department for
further processing.
CIGRETTE PACKING DEPARTMENT
CPD receives cigarette sticks from CMD and packs them in flats. This process of
cigarette packing is also done through fully automated machines. GDX-3 is the highest
capacity machine that is installed in Jhelum Factory which has the capacity of packing
500 packets per minute.
Firstly cigarettes are packed in packets (flats) then ten flats are transformed into an
outer. These outers are further packed into a CBC, each CBC contains 10000 sticks.
Then these CBCs are transferred to shipping godowns from where they are transferred
to Marketing warehouses on demand.
8
FILTER ROD
Filter rod department works as a subsidiary department to the SMD. The filter rod
department prepares the filter rod. The Material Management Department supplies the
raw materials, which are mainly acetate Tow, plug warp, till box, hot melt and
adhesives. The filter rod is manufactured in two sizes, one is a 54mm and other is
66mm. The filter rod hence produced, is sent to the SMD through filter rod treys. There
is machine that adds the filter rod to cigarettes.
PROCESS CHOICES
Process Choices for the above three stages are:
Phase 1 is done through a batch process
Phase 2 and 3 are done through a continuous process
The manufacturing is not ‘made to order’ its ‘made to stock’ based on volumes
9
Figure 2: Process Choices Diagram
FORMAT OF BATCH
001 JI 01 A
Day Jhelum factory Mach. No. Shift Code
PROCESS FLOW DIAGRAM
10
Figure 3: Process Flow Diagram
MANAGEMENT OF TECHNOLOGY
PRODUCTION TECHNOLOGY
Latest state of the art machinery is used at PTC Jhelum, which includes:
Direct conditioning and casing Cylinder-2005
Lamina-Cutting PMD 2005
ITM Dryer PMD 2005
3CC Cylinder
GLT Plant is used for segregation of lamina from the stem
PROTOS machine
G.D X1,X2,X3 is used for multi brand packaging
LOGA MAX( French made) 8500 cigarettes/min
LOGA MAX(German made)
In1956 they were producing 1000 cigarettes per minute but due to constant innovation
of machinery they are now producing10, 000 cigarettes per minute and are packing
500 packs per minute.
To bring precision machines are managed for productivity and packaging of each
brand) make and package balance
RESEARCH AND DEVELOPMENT
Their training center comprises of the following:
Creating
Implementing
Managing effective R&D
Currently their T&D department is working on reducing the nick and tar level so that
their cigarettes cause less harm to their consumers and is their first preference.
11
INFORMATION TECHNOLOGY
Information Technology (IT) is to provide business consultancy with a technical
infrastructure that enables PTC to perform with speed and flexibility of an integrated
virtual team”
IT is the backbone of every business; without it concept of successful business is
becoming impossible in modern business environment. The information technology
does a great work in today’s modern industrial world. To be competent and successful
every business needs to have a computerized system. Every moderate and large size
business needs;
Accurate and timely information
Accurate transfer of information
Processing of data
Proper record keeping
For Electronic Data Interchange “Minitab” is used for the communication between
manufacturing plant and head-office.
TOTAL QUALITY MANAGEMENT
As the name indicates the department checks and ensures the quality of the product at
different stages to get the maximum satisfaction of the customer, which is the primary
goal of the factory. It mainly deals with P.M.D and S.M.D.
This has always been an area of major focus for PTC as they are extremely cautious of
their product quality. There was a time when PTC was 12 points behind their major
competitor but now through TQM they have now become the market leaders and are 4
points ahead of them.
ISO 9000 certified
Six sigma- they have achieved a green belt
MRP (Managing, Resourcing, and Planning) are main functions that the organization
is focusing for quality assurance to International standards. i.e. MR II classic
certification.
12
RELATION WITH P.M.D
In P.M.D they find and check three types of parameters;
Fill value
Moisture
Particle size
RELATION WITH S.M.D
In S.M.D finished product inspection (F.P.I) system is followed. It is further sub divided
into two branches:
M.Q.I (Manufacturing quality index)
P.Q.I (Product quality index)
M.Q.I
In M.Q.I nine parameters are measured. Parameters are
Circumference
Weight
Filter pressure drop
End fall out
Cigarette pressure drop
Moisture (After packing)
Firmness
Visual tests
Cigarette
Packet
Outer
Pack seal
P.Q.I
In P.Q.I there are fourteen parameters. Mostly are same as that of M.Q.I but only two
are different which are;
13
NFDPM ( Nicotine free dry particulate matter)
Puff Numbers
Standard average puff numbers for P.G =8.5 for others brands =9
MACHINES USED FOR CHECKING QUALITY
Q.T.M (quality test module)
Infra Red Lab
Rotap machine
End Stability Tester
Densimeter height (d.m.h)
Ovens
CONTINUOUS IMPROVEMENT
To focus on continuous improvement PTC is emphasizing on following:
Improving quality of Tobacco through R & D department
Giving the toll numbers on cigarette packs for feedback from customers
Maintaining shelf life of minimum three months
State of the art maintenance shop
Boiler House
Most modern service area
Smart engineering stores
Shift change over time 3 minutes
INTERNAL FAILURES
There are rejections and wastages in PTC but no cut of pay cost of employees.
Wastages are two percent of total production.
EXTERNAL FAILURES
Let’s suppose if one pack of Gold Leaf returns from the market it will cost 375 Rs. to
company where as its market price is 65 Rs.
14
PHASE – II
CAPACITY
Capacity is the maximum rate of output of a process or a system. Capacity often refers
to an upper limit on the rate of output. Different companies have different measures of
capacity. Capacity on the basis of output has been divided into two categories as
effective capacity and peak or design capacity.
Production capacity in Pakistan Tobacco Company is measured in terms of number of
sticks produced per annum. Pakistan Tobacco Company has two plants which meets
the demand requirements of the country. Total production capacity of both plants is 45
billion sticks per annum this year and is continuously on an increasing trend per year.
Akora Khatak plant produces 23 billion sticks per annum whereas Jhelum plant
produces 22 billion sticks per annum approximately. This production is carried under
effective production capacity. The latest production machine “Protos” at Jhelum plant
produces approximately 8,500 sticks per minute under effective capacity. But whenever
the company required increased production, under the peak capacity, the machine
“Protos” can produce 10,000 sticks per minute approximately. Effective capacity is
always less than the peak capacity because of certain factors that Pakistan Tobacco
Company also faces on its plants. Some of these factors which cause actual output to
be usually less than effective capacity are as follows:
Attendance
o Absenteeism of workers and operators etc
Breakdowns
o Machine break downs (Machines inefficiencies)
o Skill level of employees
o Periodic maintenance of equipment
o Quality problems
o Lunch breaks, coffee breaks
o Stoppages (Time loss)
Changing product mix, shortage of materials etc.
15
CAPACITY PLANNING
Pakistan Tobacco Company focuses on pull strategy while doing capacity planning.
Pakistan Tobacco Company has designed its operations on the basis of made to stock
rather than made to order. Because in the Tobacco industry the demand is always high
and there is a continuous struggle for meeting the demand. Pakistan Tobacco Company
executes its capacity planning on the basis of previous trends in sales.
However there is a high demand before budget and demand sharply goes down after
budget and in the period of Ramadan. The monthly production plan is prepared at
Pakistan Tobacco Company head office based upon market research and previous
history. Competitive market analysis also plays a vital role in capacity planning. For the
capacity planning according to demand (which is ever increasing) and previous sales
trends, Supply chain management department, Production department, Marketing
department, Finance department etc. coordinate with each other to forecast the demand
and devise the capacity planning and capacity cushions.
Planning depends on the availability of buffer stock and things in the pipe line of the
supply chain. Pakistan Tobacco Company has its 9-11 days buffer stock available in the
warehouses.
Different measures of capacity are useful in defining two measures of system
effectiveness: efficiency and utilization. Efficiency is the ratio of actual output to effective
capacity. Utilization is the ratio of actual output to peak capacity. Pakistan Tobacco
Company has “Protos” machines for cigarette manufacturing which have following
efficiency and Utilization ratios:
(Production figures are shown as per annum)
Efficiency = Actual Output / Effective Capacity
Efficiency = 450,000,000/450,000,000 * 100% = 100%
Utilization = Actual Output / Peak Capacity
Utilization = 450,000,000/480,000,000 * 100% = 93.75%
16
CAPACITY STRATEGIES
Capacity cushion is the amount of reserve capacity a process uses to handle sudden
increases in demand or temporary losses in production; it measures the amount by
which the average utilization (in terms of total capacity) falls below 100 percent. As the
cigarette demand is on increasing trend, so 15% of capacity cushion is enough for
Pakistan Tobacco Company.
Capacity Cushion = 100% - Utilization Rate (%)
Capacity cushion = 100% - 93.75% = 6.25%
EXPANSION
In the case of Pakistan Tobacco Company, generally it meets the forecasted demand
and it happened rare that the company fell short of supply. The two plants in Jhelum
and Akora Khatak are enough to meet the country demand of cigarettes. So “wait-and-
see strategy” is being used whenever needed to meet the demand. Like Jhelum plant
has new Protos machines but Akora Khatak consists of old machines whose production
capacity is less. This time the short term strategy to expand to meet demand will be to
install Protos in Akora Khatak plant as well.
CAPACITY REQUIRMENT
The capacity requirement is being calculated with the complete coordination of
production department, supply chain department, finance department, inventory
management and other related departments. Generally, the capacity requirement is
measured on the basis of output measures. Output measures are appropriate for high
volume processes with little product variety or process divergence. Pakistan Tobacco
Company uses demand forecasts for the future capacity requirements. As the demand
is on increasing trend, so capacity requirements are also increased accordingly.
17
LOCATION
Location considerations are very important for any business. Location decisions
represent an integral part of strategic planning process of virtually every organization.
Pakistan Tobacco Company also focused on important issues pertaining to location
because location decisions often have an impact on investment requirements, operating
costs and revenues, and operations. A poor choice of location might result in excessive
transportation costs, a shortage of qualified labor, loss of competitive advantage,
inadequate supplies of raw materials, or some similar condition that is detrimental to
operations.
Pakistan Tobacco Company started its operations in 1947 right after the partition of sub-
continent by taking over the business of Imperial Tobacco Company and its plant in
Jhelum. Currently Pakistan Tobacco Company has two plants performing the operations
in Jhelum and Akora Khatak. Both these plants are used for making cigarettes. The
different features of both plants and dominant and secondary factors associated with
the location are described as under:
JHELUM FACTORY
Pakistan Tobacco Company acquired Imperial Tobacco Company in 1956 that was
incorporated in sub-continent since 1926. Jhelum is located in 100 kilometers in south
from Islamabad, the capital of Pakistan. Initially the Jhelum factory was working in
single shift and then in 1971 it started working on second and third shifts due to
increasing demand. Following are the dominant factors in selection of Jhelum location
for Pakistan Tobacco Company:
The location is ideal in terms of covering the Punjab and NWFP.
Already established infrastructure (Imperial Tobacco Company)
Skilled labor with respect to wages (The major workforce at Jhelum plant is of
retired Pakistan Army soldiers; as Jhelum has major population serving in
Pakistan Army).
Reduced supply chain costs and accessibility in central Punjab
18
Jhelum plant is hub for packing material which is imported from Singapore,
Indonesia, Philippines, and Japan etc. So easily cover the requirements of both
plants in terms of providing packing material.
Plant on Grand Trunk Road (GT Road).
The brands that are produced in Jhelum plant are:
Benson & Hedges
John Player Gold Leaf
Capstan
Gold Flake
AKORA KHATTAK FACTORY
Akora Khatak factory started its operations in 1976. Akora Factory is situated 100
kilometers in North from Islamabad. A special thing about Akora Khatak factory is that it
is situated with Leaf warehouses in NWFP. The cut leaf is shifted to Green leaf
threshing (GLT) plant and mixed with specific ratio for different blends and converted
into Prized leaf which is then shifted to both plants for manufacturing of cigarettes. So
Akora Khatak factory has no such transportation costs for raw materials.
The dominant factors for choosing the Akora Khatak plant are as follows:
The leaf threshing department (a whole separate production) is with the Akora
Plant, thus saving the transportation costs of Prized leaf.
Ideal location for supply in Sindh and Balouchistan.
Availability of cheap and skilled labor
The feasibility of land and environment
Lowered costs i.e. purchased land, raw materials etc.
Plant at main road of Noshehra (Grand Trunk Road)
The low premium brands produced at Akora Khatak plant are:
19
Capstan
Gold Flake
Embassy
As there is availability of high-tech machines so setting up a new plant is not feasible in
case of high demand. By replacing the machines could overcome the issue of high
demand only if required. But the following dominant and secondary factors are
considered by Pakistan Tobacco Company, if at any point in time, in future, they have to
establish a new plant:
DOMINANT FACTORS
Proximity to raw material: Prized Leaf (Because prized leaf is blend mixed and
costs more than normal leaf, so it is most important of its safe supply)
Skilled Labor (Labor is the major resource for effectively and efficiently carrying
out the business operations)
Investment and costs
SECONDARY FACTORS
Location as peaceful, secure and legally protected (Current condition)
Proximity to markets
LAYOUT
20
Layout decisions are important for the three reasons: (1) they require substantial
investments of money and effort, (2) they involve long term commitments, which makes
mistakes difficult to overcome and (3) they have significant impact on the cost and
efficiency of short term operations. Pakistan Tobacco Company has built the lay out in
such a way to avoid inefficient operations or accidents. As for the project of course
“Operations & Productions Management” we have selected Jhelum plant of Pakistan
Tobacco Company and visited the plant location and studied the layout.
Layouts are generally of four types: Product layout, Process Layout, Fixed position
Layout and Hybrid Layout.
The Jhelum plant of Pakistan Tobacco Company has operations under process layout
rather than product layout for continuous flow of material. Process layout is that which
can handle varied processing requirements.
The processing of raw material until its finished form occurs in a forward straight path as
shown in figure in Annex - A. The raw material is brought in Primary Manufacturing
Department, from after blending and mixing of leaf and stem, it is kept in cold room.
Then these wooden boxes of mixtures for cigarettes are moved to Secondary
Manufacturing Department where cigarette making section, filter rod and cigarette
packing sections helps in making finished products.
21
PARK ING AREA
Sentry Post
TO
JH
ELU
M
EMERGENCY DOOR
5' X 7'
RAILWAY LINES
Exp. J oint
B
Exp. J oint
Leaf G
odow
n No
5
EntranceWorkers main
LAWN
Store
Information T echnology Section
Porch
Server Room
P
U
L A W N
M a i n C o r r i d o r
S E W R A G E L I N E S
Fountain
PLACEPRAYER
K itchen
(Central)PMD DRF Room
LT
Ro
om
Office
DRF Room
Bo
ile
r H
ou
se
Ro
om
Off
al
Leaf G
odow
n No
6
SH
ED
RE
CL
AIM
ING
YA
RD
SH
ED
Leaf G
odow
n No
8
Fire Point
WIC
KE
T G
AT
E
6'-6
" P
assa
ge
Store
Store
21'-6" x 29'
Conference Room
IR Manager HR Manager
Chilling Units
WM
Go
do
wn
4 B
Ab
so
rtio
n C
hil
ler
Fo
r C
TS
Waste pit
ETP
Boiler Engg
Sc
rap
ya
rd
WM (TIL BOX SHED)
Removable platform
S H I P P I N G P L A T F O R M
SCD
SectionElectric
Garage
LRC
Manager
M e et ing Room
Wash basin
FG Godown ICM
EHSMUnionOffice
Class Room
QA managerFPSM
A/C
Store
TO
ILE
T B
LO
CK
U P
Room
6 ' x 5'
2'
3'
WATER COOLERS
6 ' x 5'6 ' x 5'
Traninig Lecture Room
PASSAGE 6'-0"WIDE.
TROLLEYSPACE
PANTRY
WASH ROOM
STOREFirstaid
COOKING AREA
TANO OR AREAStoreWASHING
13'-7"x9'-0"WASHING
VERANDAH
LOCKERS6'-6.5"x9 '-0"
KIT.ENT.
a/c
coo
ler
coo
ler
CTS
14' M a i n c o r r i d o r
PMD Fitting Shop
Traninig Centre6 ' x 4 '
37' x 14'
Canteen
W AITING AREA14 '-3"x34'-6"
TABLE TENNIS
WASH ROOM
6 ' x 4 '
TEAM ROOM
5 ' x 8 '
3 ' x 7 '
6 ' x 4 '
6 ' x 4 '
6 ' x 4 ' 6 ' x 4 '
LRR
COMPOUND WALL
Sa
les G
od
ow
n
35'
35'
35'
6' HIGH WALL
80'
35'
Future Extension
Security Manager
wm material for filter rod
Wash Basin
Wash Basin
Wash Basin
Wash Basin
DOOR
MACHINARY STORE
Offi ceP roduc t ion note
M T C S afe Cus tody Sa ve
LAWN
LA
WN
LAWN
LAWNLAWN
CYCLE SHEDS
WM
Go
do
wn
4 A
FA
CT
OR
AY
GA
TE
15'
33'-8
"
EN
TRA
NC
E
K it chen Was te
R ec la im ing Was te
W et Was te
C ig rate W as te
d o or
s e cu r it y
Co u n te r
Quality Lab
DOOR DOOR
Reception
Feeder Area
En
gg
. S
tore
s
21
' x
21
'17
' x 9
'-6"
S h e lv e
A/C
3'
DOOR
CB
C E
XT
EN
DE
D A
RE
A
Ca
se
Pa
ck
er
DOOR
Porch
Fountain
DRF Room
FG
Go
do
wn
7
Lo
ad
ing
Po
int
FG
Go
do
wn
7
FG
Go
do
wn
1
FG
Go
do
wn
Tra
nsit
Ex-Qasim
SMD
PMDLea
f Godo
wn N
o 5
L ead & R ec laiming
Offi ce
Leaf
God
own
No 9
Leaf G
odow
n No
12
Leaf G
odow
n No
13
Leaf G
odow
n No
11
EMERGENCY DOOR
5' X 7'
RAILWAY LINES
Exp. J oint
B
Exp. J oint
Ent ranceWorkers main
LAWN
Store
Information T echnology Section
Porch
Server Room
P
U
L A W N
M a i n C o r r i d o r
S E W R A G E L I N E S
Fountain
K itchen
(Central)PMD DRF Room
LT R
oom
Office
DRF Room
Boi
ler
Hou
se
Roo
mO
ffal
SH
ED
RE
CLA
IMIN
G Y
AR
D
SH
ED
F ire Point
6'-6
" P
assa
geS tore
Store
21'-6" x 29'
Conference Room
IR Manager HR Manager
Chill ing Units
WM
God
own
4 B
Abs
orti
on C
hille
rFo
r C
TS
Waste pit
ETP
Boiler Engg
Scr
ap y
ard
WM (TIL BOX SHED)
Removable platform
S H I P P I N G P L A T F O R M
SCD
SectionElectric
Garage
LRC
Manager
Meeting Room
Wash basin
FG Godown ICM
EHSMUnion
Offi ceClass Room
QA managerFPSM
A/C
Store
TO
ILE
T B
LOC
K
UP
Room
6' x 5'
2'
3'
W AT ER COOLE RS
6' x 5'6' x 5'
Traninig Lecture Room
PASSAGE 6'-0"WIDE.
TROLLEYSPACE
PANTRY
WASH ROOM
STOREF irstaid
COOKING AREA
TANOOR AREAStoreWASHING
13'-7"x9'-0"WASHING
V ERANDAH
LOCKERS6'-6.5"x9'-0"
K IT.ENT.
a /c
coo
ler
coo
ler
CTS
14' M a i n c o r r i d o r
PMD Fitting Shop
Traninig Centre6' x 4'
37' x 14'
Canteen
WAITING AREA14'-3"x34'-6"
TABLE TENNIS
WASH ROOM
6' x 4'
TEAM ROOM
5' x 8'
3' x 7'
6' x 4'
6' x 4'
6' x 4' 6' x 4'
COMPOUND WALL
Sal
es G
odow
n
35'
35'
35'
6' HIGH WALL
80'
35'
Future Extension
Security Manager
wm material for filter rod
W as h Basin
W as h Basin
W as h Basin
W as h Basin
DOOR
MACHINARY STORE
OfficeProduction note
MTC Safe Custody Save
LAWN
LAWN
LAWN
LAWN
WM
God
own
4 A
door
security
C ou nte r
Quality Lab
DOOR DOOR
Reception
Feeder Area
Engg
. Sto
res
21' x
21'
17
' x 9
'-6"
Shelv
e
A/C
3 '
DOOR
CB
C E
XTE
ND
ED
AR
EA
Cas
e P
acke
r
DOOR
Porch
Fountain
DRF Room
FG G
odow
n 7
Load
ing
Poi
nt
FG G
odow
n 7
FG G
odow
n 1
FG G
odow
n T
rans
it
Ex-Qasim
SMD
PMDLead & Reclaiming
Office
Geo mapping for Leaf Operations at PTC-JF
L13
L12
L11
L9
L8
L10
L5
L6
Process Map
Leaf issuance to PMD (D1)
Receipt of local and imported tobacco (S1)
CONCLUSION
22
Figure 4: Process Layout Diagram PTC Jhelum
All the activities carried out at Pakistan Tobacco Company are well planned and are
adjusting to Political – Legal environment, Cultural Environment, Technological
environment and other related strategic issues. British American Tobacco Company is
giant of the World in cigarette manufacturing industry and is following the best operating
procedures to enhance the business. The management team at Pakistan Tobacco
Company and workforce in both plants are well competent to carry out the industry
operations effectively. We visited the Jhelum plant of Pakistan Tobacco Company and
understood how effectively each operation within plant has been carrying out by the
employees. The practical view and understanding has been related with theory of
operations and production management and the concepts have been cleared.
RECOMMENDATIONS
23
• Reduction in tobacco wastages must be addressed.
• Growth of brands and volumes.
• Productivity enhancement and reduction in stoppages
• Low brand margins.
• Low skill level of master technicians
• Low education and skill level of employees for advanced machinery
• Unstable inventory level because of before time and pending deliveries
• Service level of local suppliers for PTC must be improved in order to reduce the
problems related to quality
24
ACTION PLANS
Raw material must be handled with care by the employees. Workers must be
specifically trained to carry out the activities effectively and minimize the wastage
of raw material. The machinery in Primary Manufacturing Department in which
leaf and stem are separated are locally manufactured and needed to be replaced
with efficient and latest machines.
As the current situation of inflation in the Pakistan, PTC should introduce new
brands of lower costs and accessible to lower income level people. This will
cause to keep the volume growing and enhance the shares and profits.
Production schedules, availability of raw material, activities with in plant,
employees’ training and machines maintenance schedules must be carried out
effectively to avoid stoppages and breakdowns during production.
As the new machinery is being imported from other countries with the passage of
time, similarly employees must be given training according to that. Technical
engineers must get training of latest machines to avoid problems during
production.
All the departments in Head Office of Pakistan Tobacco Company which is in
Islamabad must be coordinated with production managers and technical
personnel at both plants in Jhelum and Akora Khatak to accurately forecast the
demand fluctuations and handle the increasing demand. This will help to avoid
excessive inventory stocks and decrease inventory costs.
25
BIBLIOGRAPHY
Primary Data:
Visit to plant: Pakistan Tobacco Company, Jhelum Plant
Interview with Production Leader “Muhammad Amir Zamurad”
Secondary Data:
www.ptc.com.pk
www.google.com/PTC
www.wikipedia.com
26