introduction ptc

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OPERATIONS & PRODUCTION MANAGEMENT BBA VI-C BAHRIA UNIVERSITY ISLAMABAD PROJECT REPORT Submitted to: Sir Tahir Masood Submitted By: Muhammad Akil Muhammad Bilal Bilal Sohaib Husnain Khan i

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Page 1: 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

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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

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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

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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.

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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

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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

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Figure 1: Organizational structure

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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,

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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.

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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

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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.

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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.

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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

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Figure 2: Process Choices Diagram

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FORMAT OF BATCH

001 JI 01 A

Day Jhelum factory Mach. No. Shift Code

PROCESS FLOW DIAGRAM

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Figure 3: Process Flow Diagram

Page 14: Introduction ptc

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.

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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.

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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;

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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.

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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.

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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%

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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.

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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

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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:

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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

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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.

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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

Page 26: Introduction ptc

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

Page 27: Introduction ptc

• 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

Page 28: Introduction ptc

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

Page 29: Introduction ptc

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