KOHINOOR TEXTILES MILLS

The Kohinoor Maple Leaf Group was born from the trifurcation of the Saigol group of companies and is a reputable and leading manufacturer of textiles and cement. KMLG comprises of Kohinoor Textile Mills limited (KTML) and Maple Leaf Cement factory limited (MLCF). Both companies are incorporated in Pakistan and are listed on three stock exchanges of the country.

1-Company Introduction
KTML was established in 1953 at Rawalpindi and is one of the oldest companies of Pakistan with over 50 years experience in textile manufacturing. It was initially set up as a spinning and weaving project with 25,000 spindles and 600 looms. However, after decades of aggressive expansion and modernization KTML has emerged into a fully vertically integrated home textiles company with state of the art capabilities for spinning, weaving, dyeing, printing and stitching. The company has a diverse customer base with sales in both the local and export markets. The main international markets include Asia, Europe, USA and Australia. Vision Statement The Kohinoor Textile Mills Limited stated vision is to achieve and then remain as the most progressive and profitable Company in Pakistan in terms of industry standards and stakeholders interest. Mission Statement The Company shall achieve its mission through a continuous process of having sourced, developed, implemented and managed the best leading edge technology, industry best practice, human resource and innovative products and services and sold these to its customers, suppliers and stakeholders.

Principal Business Activities Kohinoor Textile Mills Limited is a public limited Company incorporated in Pakistan under the Companies Act, 1913 (now Companies Ordinance, 1984) and listed on all Stock Exchanges in Pakistan. The registered office of the Company is situated at 42-Lawrence Road, Lahore. The principal activity of the Company is manufacturing of yarn and cloth, processing and stitching the cloth and trade of textile products.

2. Business Operations
The business process at Kohinoor Textiles (KTML) starts when the marketing team of the company comes into contact with the potential customers. The customers of the company are mostly other businesses such as Harbor Linen and Standard Textiles of USA. As soon as an interest of order is expressed by the potential customers, the marketing team of the company then involves the Merchandiser who is stationed at the headquarter of the company which is located in Rawalpindi, Pakistan. The merchandiser of KTML then acts as a middleman in the communication between the customer and the production department of the company till the time the order is complete, quality is inspected by the customer and is dispatched to them. Once the terms and conditions of the order are finalized by the merchandiser with the customers of KTML, the order for the raw materials to the suppliers are then placed by the purchase department which comes under the of the production planning and coordination department (PPC).

3-Supply Chain Management

The supply chain management at KTML is mainly done by the merchandiser of the company. It does not have a separate department for the management of the supply chain procedures, however the PPC and the merchandiser of the company jointly oversee the efficient management of the procedures. The supply chain procedure at KTML starts with the purchase of yarn depending on the type and size of the order received. In certain cases doubling is done and the yarn purchased is made thicker as per the requirements of the customer by availing the services of the third parties located within Pakistan.

After the yarn is purchased, the weaving process begins at the facility of KTML. Weaving is a method in which two distinct sets of yarn are interlaced together at right angles to form a fabric or cloth. When weaving is completed, the fabric made undergoes a number of processes depending on the type of the order received. The processes carried out at KTML consist of Dying, Bleaching and Mercerizing of the product. Once the fabric is dyed and bleached according to the order, mercerizing is carried out to strengthen the fabric and improve its appearance. By the end of mercerizing, the product has gone through all the processing that needs to be done in accordance with the order placed by the customer. After this, comes the role of the packaging department, which packages and tags the products prepared so that the final product is ready for dispatch.

1- Procurement
Definition of procurement Procurement is the acquisition of goods or services at the best possible price, quality and quantity with in specified time at desirable location from the right source. Principal of Procurement

All Public procurements in Pakistan are regulated by the Public Procurement Regulatory Authority (PPRA), which has notified the Public Procurement Rules 2004 (PPR 2004). While all private companies have their own internal procurement regulatory authority. So All Purchasing Authorities and Purchasing Units of KTML follow the internal procurement regulatory authority of KTML.

Kohinoor Textile mills acts on the push process. That is, the orders to the suppliers for the raw materials are only made once the orders for the final products are received by the Merchandiser. The procurement procedure of KTML is based on a 10 step process which starts with the receipt of a purchase requisition (PR) by the PPC department. The purchase requisition clearly defines the specifications of the items requested to be purchased.

2. Planning
2.1
Procurement Planning

As following the requirement of procurement regulatory authority of KTML, they announce all proposed annual procurements in an appropriate manner for each financial year and on demand basis and proceeds without any splitting of the procurements so planned. The advertisements are placed on the KTML website or print media as per rules. Procurement planning is started at least three month before the closing of the financial year. 2.2 Specification Requirement of goods/services

KTML furnishes goods or service specifications in the manner that allows the fair possible competition, and not favors any single supplier and put others at disadvantage. Specifications are generic. 2.3 Approval Mechanism

In KTML there are some procurement rules that provide clear authorization and delegation of powers for different categories of procurement. So they developed power of delegation document in this regard. As per delegation of power, the Section heads/Procurement Officers are authorities to procure up to the financial limit of Rs.1 million 2.4 Method of Advertisement All procurements are advertised on website and print media. KTML procurement authorities utilizing electronic media ensure that the information posted on the website is complete for the purposes for which it has been posted, and such information will remain available on that website until the closing date for the submission of bids. 2.5 Response Time

The KTML authorities may decide the response time for receipt of bids or proposals (including proposals for pre-qualification) from the date of publication of an advertisement or notice, keeping in view the individual procurements complexity, availability and urgency. However, under no circumstances the response time is less than fifteen days for national competitive bidding and thirty days for international competitive bidding from the date of publication of advertisement or notice.

All advertisements or notices expressly mention the response time allowed for that particular procurement along with the information for collection of bid documents which will be issued

till a given date, allowing sufficient time to complete and submit the bid by the closing date. No time limit is applicable in case of emergency.

The response time is calculated from the date of first publication of the advertisement in a newspaper or posting on the web site, as the case may be.

In situations where publication of such advertisements or notices has occurred in both electronic and print media, the response time is calculated from the day of its first publication in the newspapers. 2.6 Formation of Purchase Committee This committee is formed as per the power delegated. The Purchase Committee members mostly include:

1. Finance Department Rep. 2. Procurement Rep.

The Committee functions includes o Facilitate and recommend approval or rejection for Purchasing Authority o Ensure compliance with Purchase Policy and Procedures o Provide resource for forming Evaluation Committee for evaluation of tenders o Declare Award of contracts to the responsive lowest bidders o Approval of quotations 2.7 Evaluation Criteria KTML will formulate an appropriate evaluation criterion listing all the relevant information against which a bid is to be evaluated.

3- Sourcing

Sourcing depends on the production capacity of KTML. As KTML has its own units of spinning, weaving, dyeing and printing and stitching. So they didnt need outsourcing most of the time. Very rarely out sourcing is done when the order exceeds the production capacity. Printing is out sourced if required by the customer. The weaving process is sometimes also out sourced if KTML machines are not capable of meeting the requirements of the raw clothe demanded by the customer. Outsourcing by KTML follows: a. Pre-Qualification of Supplier and Contractors

Pre-qualification may take into consideration the following factors: o Relevant experience and past performance o Capabilities with respect to personnel, equipment, and plant o Financial position o Appropriate managerial capability

KTML ensures that the Pre-qualification is not used to limit competition to a predetermined number of potential bidders. All applicants who have the qualifications to perform the proposed contract should be pre-qualified and bidding documents made available to all those who pre-qualified. No upper limit is imposed on the number of prequalified potential bidders, but, if the pre-qualified applicants are too few to ensure competition, a reassessment of the situation can be carried out. b. Qualification of Supplier Qualification of supplier is done on their professional, technical, financial, legal or managerial competence whether already pre-qualified or not. c. Disqualification of Suppliers and Contractors KTML can disqualify a supplier or contractor if it finds, at any time, that the information submitted by him concerning his qualification as supplier or contractor was false and materially inaccurate or incomplete.

4-Procurement Methods
a- Spot Purchases All section/departments managers are issued an amount of Rs.25000 for spot purchases and they are authorized to purchase up to their need. b- Limited Tender The purchases up to the amount of rupees 50,000, are made through limited tenders, in which RFQ/RFP is sent to the prequalified suppliers. Minimum three quotations are required to prepare. All such purchases are made through procurement section.

4-Facility
Facilities are the locations to which or from which the inventory is transported. In a facility, inventory is either transformed into another state (manufacturing) or it is stored (warehousing). KTML has 3 main facilities, two of them are manufacturing, and one is a warehouse. One of the production facilities is situated almost 5 km away from the commercial area on the Peshawar road, Rawalpindi. It is known as KTML Apparels. In this facility, there are looms and the stitching departments situated. So that makes it a functional-focused facility. Looms are used to create different types of fabrics, and stitching department is also flexible enough to cater to different customer requirements, so that makes it a flexible facility. The other facility is the processing plant known as KTML Processing Which includes processes like Dying, Bleaching, Mercerizing. The processing plant is situated at the same place. This facility is also a functional-focused and flexible facility. The third facility is a storage facility situated on the same place with some distance. This is primarily a storage based facility where the bails of yarn are stored.

5-Transport
The transport is a very crucial driver within the supply chain of any company. As transportation moves products between different stages in a supply chain. There are different processes at different stages for which the inventory (finished or W.I.P) is to be transported. In KTML, the

process of transport starts when the yarn is bought. The yarn is then transported to the weaving facility using their own transporting vehicles. This is a type of an LTL (less than truck load) transportation system. The fabric produced then is transported to the Processing Facility using the same mode of transportation. The final product then is to be transported to the customer via Air or Water, as advised by the customer. The most common method is Water, since most of the customers or KTML are overseas, and also this is cheap. But at the same time, very slow aswell. Transportation through Air is used when either the customer demands an immediate supply or when time is short. The difference between both the modes is that, a usual shipment to U.S takes 45-60 days in clearing through Water, and 5-7 days through Air.

6- Inventory
The inventory depends on order of the customer. Raw materials are purchased according to the requirement of the order and stored for a very short period of time. Things like threads, needles etc which are very small in nature, are kept in inventory but in low quantities. The inventory of raw clothe sometimes can be season as in winters due to gas load shedding, the processing cannot take place. So it is made in advance and stored for the load shedding days. Once the good is completed it is shipped out within very short time.

7-Information
The organizational structure of KTML is very simple so no complex information system is required or used by KTML. The information is transferred through emails and phone calls. Once in a while personal visits are paid by the customers at the facility or one of the director visits the customer abroad.

8-Distribution Network

The distribution network used by KTML is manufacturer storage with direct shipping. It means that it produces the product required by the customer, then it is stored in a warehouse which is in the facility and in the last it is shipped or delivered to the customer not the final consumer. The transactions of KTML with its customers are B2B (Business to Business) which means that the

customers of KTML are other businesses operating in different markets and then they sell the good to the final consumer. In this distribution network the cost of inventory is usually lower because the demand is already known. The inventory kept by KTML is centralized due to which it is able to lower its cost and it is one of the biggest advantages of this type of distribution network. The transportation costs are usually high because different modes of transportation are used till the goods reach customer. As the company operates in Rawalpindi and its customers are situated overseas so once the order is completed, the goods are sent by road to the Karachi sea port in trucks. After which the container is loaded in the ship and then it is send by sea to international customers. Sometimes the customers require certain quantity of order urgently so therefore it is sent to them by air but the remaining quantity would be sent by sea. The facility cost is low as the goods are produced, packed and stored under one manufacturing unit. The handling cost is also low because goods are loaded once from the facility and the unloaded by the customer. There is no loading and unloading done in between. The information cost is minimal because the transfer of information is done mainly through emails and phone calls. On a rare situation the customer asks any KTML personal, such as Director of the company for a formal visit. The whole process of manufacturing to the shipping and receiving of customer is lengthy so the responsiveness time is low. For example only the shipment of goods to USA by sea takes 45-60 days from Pakistan. The cost of return ability is high because the shipment costs are very high. There is no particular way of order visibility but once the goods are shipped they can be, they can be tracked as to where they have reached at that particular point of interest.

9- Problems Faced by KTML

One of the major problems that the whole industry faces is the shortage of Gas and Electricity. However KTML faces the same issues. First reason being the shortage of Electricity, KTML uses both in house production and WAPDA for electricity, for in-house production, Gas is required, which by now is a very scarce resource in the country. A lot of companies in the industry has shifted to other sources for electricity generation, but KTML has not because of the current financial position. Also because of the shortage of resources, the previous processes are also interrupted, affecting the whole supply chain network. KTMLs processing machinery requires a fixed temperature to be maintained, and without the constant supply of Gas, it is not possible to do so.

10-Recommendations
In Pakistan, particularly in textile industry there are few firms which have a separate supply chain department. Majority of the firms have not implemented it yet and they do not know the benefits of it. As we discussed earlier that cost effectiveness and responsiveness are important elements of success of any company in any industry and supply chain department makes sure that the company achieves both. In KTML the role of supply chain department is carried out by merchandiser and PPC. So it needs to have a proper department of SCM to get the competitive edge needed to increase profit margins. The cost of returnability is very high due to the reasons mentioned above in the report, so there should be a proper check whether the order dispatching to the customer is up to his/her requirements or not. In this way the big losses which firm can face would be avoided and it would also have a positive impact on the KTMLs image as a firm. As we all know that the world has become very technologically advanced but KTML is not taking any advantage out of it because they are not using any information system, which are currently used by other firms. A good information system has many advantages, it facilitates customers to track their orders and even few firms also use it as a tool in predicting demand and supply or you can say for forecasting