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MTR Foods An Operations Management Case Study

MTR Foods, like many other organizations, deals with several aspects of operations management, be it in the choice of products and
manufacturing technology; utilization of capacity; management of quality, costing and sourcing of materials; or customer-relationship
policies.
Operations Management at MTR Foods, Bangalore Operations management is the key to achieving competitive advantage for
organizations, whether they are in the manufacturing industry or the service industry. Operations management processes address the
questions that an organization faces in its choice of products and manufacturing technology, utilization of capacity, maintenance of
quality, costing and sourcing of materials, and customer-handling policies. MTR Foods, like many other organizations, deals with
several aspects of operations management. According to company sources, MTR Foods is the fastest growing vegetarian processedfood company in India, and it had a turnover of USD 20 million for the year ending March 2008. To add to that, MTR Foods is
growing annually at a rate of 35 per cent. With a commitment to quality, recipe expertise in Indian vegetarian food, and technological
capability, MTR provides complete authentic meal solutions to today's discerning consumer. MTR brands in most categories are
market leaders in India and abroad. The company began exporting its products 10 years ago, and today, its product range is exported to
the United States, the United Kingdom, Malaysia, Singapore, the United Arab Emirates, the Sultanate of Oman, Australia, and New
Zealand.
MTR's portfolio of products covers a wide range of processed foods, including ready-to-eat, ready-to-cook, and frozen food; instant
dessert and snack mixes; spices and spice blends; vermicelli; pickles; papads; and ice cream. The products reflect the authentic flavour
of the region they are from, and contain no preservatives. MTR's manufacturing facility is located in the outskirts of Bangalore. There
are presently about 800 people working in the factory, which operates on three shifts. The factory has eight divisions. Each division
has separate buildings with modern manufacturing facilities that enable it to carry out all stages from raw-material handling to
packaging in hygienic conditions. MTR makes judicious use of technology and systems to meet consistency and quality standards.
Some of the technical know-how at MTR's ready-to-eat manufacturing division has been derived from the Defence Food Research
Laboratory (DFRL) at Mysore. Twenty-two varieties of ready-to-eat recipes are manufactured in the ready-to-eat division. The exact
proportion of raw materials are drawn, processed, and mixed according to the recipe. These are then sent to the packaging division.
The food is packed in aluminium foil while it is still hot. Aluminium foil increases the shelf life of food and prevents microbial
contamination. The packaged food then goes through the autoclave process (sterilization) so that the microbial contamination can be
brought down to zero. After the autoclave process, the packs are sent to the hard-packing section, where an X-ray machine scans them
for any unwanted particles inside the pack. MTR requires a large variety of packing material for its varied range of products and
package sizes. Furthermore, information on ingredients, shelf life, cooking instructions, and other statutory details may vary for each
packet. The packaging division at MTR is responsible for printing and preparing the packaging material. The printing is done on the
raw material for packaging, which is then laminated. These packages are then sent to the centralized store in the same division. The
packaging materials are drawn out from the central store when required and other details such as the MRP, the best before date, the
lot number, and the manufacturing date are printed on the packages before they are sent to the respective divisions. MTR Foods is an
ISO 22000: 2005-certified company. The company has also successfully met the Hazard Analysis and Critical Control Point (HACCP)
requirements. Its facilities are equipped with modern systems to ensure adherence to strict quality norms. A well-appointed lab
consisting of analytical, chemical, and microbiology sections performs a variety of tasks for quality control and assurance. In the
chemical section, several important parameters such as the pH, moisture, and the acidity of the food are checked.
Organizations face several challenges in operations management, and MTR Foods is no exception in this regard. One of its biggest
challenges is to forecast the demand for its numerous products. As MTR is in the business of manufacturing food items that have a
limited shelf life, the accuracy of such forecasts is crucial for the company. Its forecasting is based on experience, seasonal variations,
and the company's growth rate. While forecasting demand, the rise in demand during the festive season is also kept in mind. Newproduct development is also a challenge for MTR. It requires innovation, an understanding of customer preferences and tastes, and the
capacity to translate these into the final product through the right choice of raw materials, blend, and production. Therefore, it is not
surprising that MTR has a long new-product development process. New recipes are developed, tested in the product development lab,
cooked, tasted, and refined before they can be launched for regular production. Choosing the right manufacturing processes is crucial
as it has implications for the cost of operation, quality, and productivity. For example, in MTR's spices division, manufacturing
process choices closely follow the traditional method of using the best possible ingredients and hours of pounding. First, the raw
materials are roasted. Roasting serves two purposes: it increases shelf life and kills microorganisms. The ingredients are then pounded
and mixed together. MTR also faces several planning challenges. Planning for raw material procurement, the release of production
plans into the shop floor, and dispatch are just a few examples. Raw material procurement poses unique challenges as MTR's raw
materials are mostly agrarian and seasonal in supply. Good supply management practices are essential to maintain a continuous supply
of high-quality raw materials at a reasonable price. Like MTR, every organization in the manufacturing and service sectors of our
economy faces a similar set of issues, albeit in varying degrees. These issues can be addressed by applying several tools and
techniques, collectively known as operations management.
Source: Vasudeva Reddy, MTR Foods Limited, Unpublished summer study report submitted at IIM Bangalore, 2008.

Kitchen Supply Chain


The kitchen supply chain is similar to the one in the industry. The demands in terms of volumes and varieties (choices of
family members) for eatables are typically fulfilled by the housewife. She procures grocery and vegetables in an exact
quantity for daily, weekly, or monthly consumption. In Indian villages, the grains are procured for a year's consumption at
the appropriate season at the lowest prices. The materials are stored (in a warehouse at the back of the house) and drawn
for daily consumption in small quantities. The daily consumption inventory is kept on the kitchen shelf in small containers
within arm's reach. She, over a period, develops trusted vendors for her supply of grocery and vegetables or procures them
from a retail chain outlet that she chooses after thoroughly researching the available sourcing points. The kitchen is a
processing (conversion) place like the shop-floor in a manufacturing unit, where cooking schedules are planned and
implemented as per the requirements (demands) of family members. The process is flexible to take care of varieties and
volumes. The housewife also makes use of the latest technology. Modern kitchen equipments are installed and deployed
by her to cut short the processing time and to minimize the hardship of manual operations. The waste is disposed in a
dustbin, which is typically kept below the kitchen sink, similar to practices in the industry where the place of operations is
kept neat and clean. The housewife ensures that wastages are at the minimum. The extra demand of family members for
entertaining guests at dinner is met with emergency purchases from markets. On holidays and festivals, customized dishes
are prepared with advance planning on inputs (ingredients and raw materials). This speaks of end-to-end planning and
implementation in the kitchen supply chain. For the occasional celebrations, the housewife, like a supply chain manager,
outsources the place of celebration and awards the catering contract to a third party. For this, she assesses the capacity
requirements and plans them in advance keeping in mind a fixed budget that is within the salary limits of her husband.
Don't you think that the housewife is a great supply chain manager around without any formal degree or training in SCM?

Mother Dairy: A Case for Supply Chain Management?


Imagine not getting your milk packet early in the morning. It will have a cascading effect on individuals and their work
routines. D. Sharma, Deputy Manager (Marketing), Mother Dairy, New Delhi, says, We have not had a single day since
1974 when our tankers have not supplied milk. Supplying milk every day without fail essentially means putting several
principles of supply chain management to work. To understand supply chain management, let us consider the nature of
activities and the entities involved in supplying milk to customers. Mother Diary obtains its milk from hundreds of
cooperatives located in Gujarat, Haryana, Punjab, Rajasthan and Uttar Pradesh. The milk collected from these
cooperatives is transported to the Patparganj plant in East Delhi, where it is homogenized, pasteurized, and then stored in
special tanks until it is loaded into tankers for distribution. Mother Diary has a processing capacity of 650,000 litres per
day. Nearly a hundred of its tankers criss-cross Delhi and supply milk to about 568 booths located in every nook and
corner of the city. Besides its own booths, Mother Dairy also sells loose milk through over 200 manually operated
insulated containers set up in shops in congested areas and also through 300 cycle-rickshaws, which home-deliver milk in
some localities. Furthermore, it also sells milk through 850 retail shops in polythene packs. Over the years, Mother Dairy
has increased its variety of offerings. Skimmed, toned, double toned and full cream milk is available in half- and one-litre
polythene packs. Several milk derivatives are also offered. For example, Mother Dairy offers over 30 flavours of ice
creams. Managing such a large variety requires accurate methods of forecasting and demand management. Since milk is a
perishable commodity with a very short life cycle, logistics planning, demand estimation and production scheduling are
very crucial. Networking with milk-producing cooperatives and developing lasting relationships is crucial to ensuring an
assured supply of good quality milk on a daily basis. Upkeep of the processing plant, maintenance, and modernization are
important aspects of the production process. The distribution of the processed milk and a large variety of milk derivatives
require efficient network design, distribution requirement planning, logistics, and transportation planning. Finally,
managing information, material, and funds flow across the different entities is crucial for business growth and
profitability. For a commodity that has a low shelf life and criticality of time, appropriate measures of supply chain
performance are required. Responsiveness, availability, timeliness, cost of distribution, and levels of inventory at various
points in the system are a representative set of measures. Good supply chain management pays attention to all these
details.
Source: Based on Punam Thakur, The Milk Route, Business India (March-April 1999): 108.