Supply chain for Dawlwnce

Supply Chain Management Practices in Dawlance

IN THE

NAME OF ALLAH THE MOST

BENEFICIENT, THE MOST MERCIFUL

Lahore Business School, The University of Lahore – Islamabad Campus 1






Prepared By: Muhammad Naveed Bushra Raheem Mehreen Rizvi

Submitted To: Mr Amjad Shamim



TABLE OF CONTANT

AcknowledgementExecutive Summary

Chapter 1. Introduction to Home appliances

1.2 History of home appliances1.2 Current situation in Pakistan market1.3 Competitors in home appliances industry

Chapter 2 Introduction to Dawlance

2.1 Dawlance Group2.2 The vision2.3 Corporate Responsibilities2.4 Corporate Belief:2.5 Business2.6 Product line of Dawlance2.7 History of Dawlance

Chapter 3 Market position

3.1 Present market share3.2 Major market for Dawlance3.3 Promotion strategy of Dawlance3.4 Competitive strategy of Dawlance3.5 Comparison between Dawlance and PEL



Chapter 4 Major Departments in Dawlance

4.1 Key account management in Dawlance4.2 Supply chain management in Dawlance

5. Supply chain Operations in Dawlance5.1 Procurement5.2 Suppliers5.3 Manufacturing5.4 Warehouse5.5 Distributors5.6 Transportation5.7 Retailers7.8 Customers

Chapter 5 Analysis

6.1 SWOT Analysis6.2 PEST Analysis

Chapter 7 Suggestions and Recommendations

References



Acknowledgements

A million thanks to Almighty, without whose support, there is no work. Our greatest appreciation goes to Finance Manager Mr. Farrukh Dawlance Service center G/7, Islamabad for his kind help and support. Being very cooperative, He has shared very useful information about each function of the sc Department in Dawlance.

We would also like to thanks MR.AMJAD SHAMIM , our most respected coordinator (SCM), who gave us the task and opportunity to explore the SCM of an organization like Dawlance ,by keeping in mind that practical work is more effective.

We also appreciate our respected teacher Mr. WAHID RASHID. He provided us contacts in Dawlance and also provide precious guidance about the project.

It is our best effort but we could not explore supply chain properly because its head office is in Karachi.



EXECUTIVE SUMMARY

Our premise is that supply chain plays a vital role towards organizational behavior which directly affects the overall performance of the organization.

The purpose of the project is to prove this statement by showing how proactive managers and supply chain personnel have the responsibility of continuously improving contribution between all functions of the supply chain to the organization while simultaneously maintaining their level of satisfaction and other dependent variables.

The focus of this research is on the application of Supply Chain Management practices in Dawlance, its important function including suppliers, manufacturer, warehouse, distributors, retailers and customers our selected organization is Dawlance, a market leader in home appliances industry of Pakistan.

Dawlance has established an effective SC department that is maintaining all the matters regarding SC.

We have tried our best to cover all the aspects related to SCM in this project. For the purpose, Recommendations about SCM given in the end of this project are based on our own perceptions



CHAPTER 1

Introduction to Home appliances

Home appliances are electrical/mechanical appliances which accomplish some household functions, such as cooking or cleaning. In ………… Appliances may be divided into categories called "white goods" and "brown goods" in British English. Appliances may be divided into categories called "small appliances" and "major appliances" in American English. Brown goods/Small appliances are typically small household electrical entertainment appliances such as:, CD and DVD players,

1.1.1.1 Appliances

oo Camcorderso Still cameraso Clocks, Alarm clockso Video game consoleso HiFi and home cinemao Telephoneso Answering machines

1.1.1 White goods/Major appliances comprise major household appliances and may include:

1.1.2.1 Appliances

o Air conditionero Dishwasher


http://en.wikipedia.org/wiki/Dishwasher

http://en.wikipedia.org/wiki/Air_conditioner

http://en.wikipedia.org/wiki/Answering_machine

http://en.wikipedia.org/wiki/Telephone

http://en.wikipedia.org/wiki/Home_cinema

http://en.wikipedia.org/wiki/HiFi

http://en.wikipedia.org/wiki/Video_game_consoles

http://en.wikipedia.org/wiki/Alarm_clock

http://en.wikipedia.org/wiki/Clock

http://en.wikipedia.org/wiki/Still_camera

http://en.wikipedia.org/wiki/Camcorder

http://en.wikipedia.org/wiki/DVD_player

http://en.wikipedia.org/wiki/CD_player

http://en.wikipedia.org/wiki/Cleanliness

http://en.wikipedia.org/wiki/Cooking

http://en.wikipedia.org/wiki/Household


o Clothes dryero Drying cabineto Freezero Refrigeratoro Kitchen stoveo Water heatero Washing machineo Trash compactoro Microwave oveno Induction cookers

1.2 History of Home appliances:

The 1950s - A decade of change

After years of rationing and shortages, the 1950s were a period of economic richness, high employment and great technological development. Many returned servicemen got married, established homes and raised families. During this period, Australians enthusiastically adorned their homes with a dazzling range of new domestic appliances. Hire-purchase schemes allowed people to take products home and pay for them in installments.


http://en.wikipedia.org/wiki/Induction_cookers

http://en.wikipedia.org/wiki/Microwave_oven

http://en.wikipedia.org/wiki/Trash_compactor

http://en.wikipedia.org/wiki/Washing_machine

http://en.wikipedia.org/wiki/Water_heater

http://en.wikipedia.org/wiki/Kitchen_stove

http://en.wikipedia.org/wiki/Refrigerator

http://en.wikipedia.org/wiki/Freezer

http://en.wikipedia.org/wiki/Drying_cabinet

http://en.wikipedia.org/wiki/Clothes_dryer


During the 1950s, the role of women was generally considered to be that of the 'homemaker'. Bright television and magazine advertisements encouraged women to stay at home and create a domestic haven for their families using the new appliances on offer. These devices promised to raise standards of living and release housewives from the shackles of household chores.

Electric stoves, refrigerators, toasters and kettles revolutionized the kitchen, and vacuum cleaners and washing machines shaved hours off time spent cleaning. Women could enjoy more leisure time while still creating a clean, comfortable home for their families. Many women chose to join the paid workforce, changing the shape of the labor market forever.

Home appliances also came to symbolize the success and modern outlook of their owners and were often displayed in the lounge room for visitors to admire.

By the end of the 1950s, many small appliances that were at first considered luxuries, like kettles and electric mixers, were now considered 'must-have' items. Other appliances, like washing machines and refrigerators, however, were still expensive and out of reach for many families.

1960s - Mass production and disposable appliances

In the late 1950s and early 1960s, developments in manufacturing technology led to a huge increase in mass production. This included the production of electrical appliances. Coupled with an increasingly prosperous economy, mass production meant that most appliances became not just affordable, but essential parts of everyday life.

Manufacturers, however, realized that they were facing a major problem. If they continued to design high-quality products that lasted decades, then consumers would have no reason to keep buying their products. Thus, many manufacturers began to produce lower-quality appliances that were designed to be thrown out and replaced rather than repaired. This forced people to continually purchase new appliances.

In order to sell more products, manufacturers also created more diverse, innovative products that boasted a variety of features. Irons, for example, now came with



useful improvements like thermostats (a device that regulates temperature) - which rendered previous models of irons obsolete.

1960s - Design considerations

The aesthetic qualities of domestic appliances became a prime consideration for consumers in the late 1950s. The appearance of early home appliances bore many similarities to heavy industrial factory equipment - an attempt by manufacturers to emphasize the efficiency of their products. Such designs, however, tended to make appliances look more like hard work than a pleasurable experience.

Many people also liked to display appliances in their lounge rooms as show pieces rather than hide them away in the kitchen and laundry.

As a result, manufacturers altered the design of home appliances. Rather than looking like pieces of industrial machinery, appliances became smoother, shinier and more stylish and available in a variety of colors.

1970s and 1980s

By the 1970s, owning a wide range of home appliances was deemed essential for daily living.

Microwave ovens did not gain widespread popularity in UK, USA, and Australia until the early 1980s, although they had been commercially available since the late 1950s. Microwaves revolutionized food preparation - making it possible to defrost, cook or reheat food in very little time, and prompting a growth in the consumption of frozen convenience meals.

Other popular kitchen appliances of the 1980s included food processors and blenders, which also made cooking quicker and easier.

Energy efficiency



In the late 1980s and 1990s, developments in home appliances focused on energy efficiency. Environmental awareness was at an all-time high and studies had found that home appliances were a major source of electricity consumption and greenhouse gas emissions. A company introduced a product labeling program, whereby the energy efficiency of an appliance was clearly displayed. This encouraged consumers to buy the most environmentally-friendly option available.

In the 1990s, manufacturers were also subject to stricter environmental regulations. Appliances like refrigerators were required to become more energy efficient, while dishwashers and washing machines were designed to reduce water consumption.

1990s - Environmentalism and the era of improvement

Many of the home appliances used in the 1990s were essentially the same ones used in

the 1950s, albeit with minor improvements and added features. Some brand new

appliances were also available - consumers could choose from an incredible array of

machines that would make cappuccinos, bake bread, churn homemade ice cream and

even blow the leaves off their driveways. Advances in home appliance technology led to

the introduction of different plastics and other new materials. Thermoplastics increased

strength and durability and other plastics reduced the weight of appliances, which in turn

lowered transport costs. A 'noise-free' dishwasher was released in the early 1990s and

manufacturers developed quieter motors and new, sturdier types of metal and glass.

Environmental impact of home appliances in the 1990s

Constant modification meant that home appliances in the 1990s quickly became outdated. The design of most appliances also made them difficult and expensive to repair and many devices were often discarded after a short period of time. Large numbers of old home appliances began to pile up in landfill areas.



Throughout the 1990s, concerns were raised about the environmental consequences of dumping home appliances in landfill. Many appliances, especially older ones, contained toxic substances like lead, chlorofluorocarbons (CFCs), oil and grease. These substances could leach into soil and water and have serious health and environmental effects.

Disused appliances also began to use up valuable landfill areas in densely populated regions, where landfill space was fast becoming a scarce resource.

As a result, the use of high energy-consuming appliances and the large-scale dumping of home appliances in landfill areas became less socially acceptable towards the end of the 1990s. People were encouraged to think carefully about the level of waste they were contributing to landfill and to consider their energy use in the home when buying and maintaining appliances.

Social impact of home appliances in the 1990s

Time savers or time suckers?

When launched in the 1950s, home appliances were hailed as the key to relieving women from hours spent on household tasks. By the 1990s, the responsibility of performing most household chores still primarily fell on women, but research found that domestic appliances may not have actually saved women a great deal of time at all.

This peculiarity may be explained by the fact that as consumption increased throughout the decades, the quantity of household chores also increased. Washing machines, for example, may have reduced the time it took to wash clothes, but the amount of clothes people owned in the 1990s had dramatically increased. Also, home appliances may have made Australians more efficient, but the general level of home cleanliness that was considered acceptable had also risen.

Fancier kitchens, fewer home-cooked meals

Despite owning more appliances, people in the 1990s spent less time preparing meals than in the past.

In the 1940s, British spent around six hours per day purchasing and preparing food. By the 1970s, this had dropped to two hours. By the end of the 1990s, many people ate a large proportion of take-away or supermarket convenience meals, and spent just 30 minutes in the kitchen each day.



1.3 Current Situation of Home Appliance Market in Pakistan

According to the report by Daily Times (www.dailytimes.com.pk), the business

environment is highly favorable for investment in home appliance industry of Pakistan.

Therefore home appliance industry is getting attention of foreign investors as well.

China’s home appliance

Giant Haier has established the industrial zone in Punjab, Pakistan which is its second

overseas manufacturing base after United States. This is joint venture in home appliance

industry between Government of China and the private sector of Pakistan. It is very large

and growing business sector in Pakistan. In Pakistani home appliance market, there are

two types of companies involved in appliance business those are local and imported

manufacturers and marketers. They are engaged in both aspects of marketing that is

business-to-business marketing (B2B) and business-to-consumer (B2C) marketing. In

business-to-business, the manufacturers sell their products to retailers those are known as

dealers. Dealers are responsible for retail selling to the end users. A few of the companies

also have their own retail outlets also. Since last few years the manufacturers are facing a

competitive and challenging situation in business-to-business relationships due to

following reasons.

There are three factors to take into account for home appliance industry in Pakistan.

Firstly, the challenging situation has been created by dealers whose profits have been

reduced due to certain policies adopted by manufacturers in the last few years. So they

are looking forward to new manufacturers entering in the industry. More profits and

better services are also being Included in their demands.



Secondly, the new entrants in the manufacturing industry including manufacturers and

importers, either they are local or foreign investors have challenged the domination of

existing manufacturers and importers.

Thirdly, due to the expansion in market size horizontally and vertically, competitive

situation has been increased among manufacturers within the industry.

Currently there is a decline in the manufacturing industry in Pakistan and especially in

the home appliances and freezing unit industry but from last six to seven years industry

growth rate is almost ten to eleven percent. There are many factors behind it like political

uncertainty, economic crush which came worldwide and energy problem in Pakistan, but

now the situation is very much under control.

1.4 Competitors in Home appliances:

1.4.1 Direct Competitors:



o Dawlance (local)o PEL (local)o LG (Korea)o Haier (china and Pakistan private sector)o Waves (local)

1.4.2 Indirect Competitors:

o Singer (local)o Samsung

Chapter # 2



INTRODUCTION TO DAWLANCE:

Dawlance is a brand name of group of companies which was established in 1980 with a name United Refrigeration Industries Limited.

2.1 Dawlance Group:

Name of Company: Nature of Business:

UNITED REFRIGERATION INDUSTRIES LTD.

Manufacturer of Dawlance Brand Refrigerators

DAWLANCE (PVT.) LTD. Manufacturer of Dawlance Brand Deep Freezers & Washing Machines

UNITED SALES (PVT.) LTD.

Hire Purchase Business of Domestic Appliances.

DAWLANCE MARKETING (PVT.) LTD.

Retail Store Network with the brand name of "Electric city"

DAWLANCE ELECTRONICS (PVT.) LTD.

Marketing and Distribution of OEM products

2.2 THE VISION:

"We are committed. Above everything else, Dawlance places its top priority on the satisfaction of human beings the satisfaction of its customers, partners and



employees. All our policies and approach towards work revolve around our corporate belief."

2.3 Corporate Responsibilities:

o Advancing the standard of living in Pakistan by manufacturing reliable and affordable electrical products.

oImplementation of first class production engineering.

o Development of our employee not only for the firm's benefit but to contribute to each employee personal growth.

o Major contributor in restoring Pakistani status and prestige.

o To reinforce value like harmony, solidarity, discipline and dedication

2.4 Corporate Belief:

o Individual must be respected.

o The customer must be given the best possible products and services.

o Excellence and superior performance must be pursued.

2.5 Business

Manufacturing and marketing of Home appliances

2.6 Product Line:



(a). Refrigeration

2.6 Product Line:











2.7 History of Dawlance:

Established 1980

Refrigerator Production 1981

Deep Freezer Production 1988

Deep Freezer Manufacturing Unit1992

Launched RAC and No-Frost Ref.1992

Launched WM and MWO 1995

Production of No-Frost Refrigerator1996

Production of Aero-Design Series1996

Production of Up-Right Freezer 1997

ISO 9001 Certification 1999

Production of Washing Machine2000

ISO 14000 Certification 2001

USL Shops 2001

Electric city # 1 2001

Signature series USL Shops 2002



2.8 Corporate Structure:

All departments of the company are linked with Head Office.Offices of National Managers are situated in Karachi.

Head OfficeDawlance Centre: 7/4, Civil Lines-9,Dr. Zia-uddin Ahmed Road, Karachi

Managing Director Mr. Bashir Dawood

Employees Management 600Worker 900Total 1500

Supply Chain Head Raja Adeel Khalid



Chapter # 3

Market Position

Leader in household appliances in Pakistan Largest Company engaged in appliances business

3.1 Present Market Share of Dawlance product is:

o Refrigerators 65%o Washing Machines 35%o Microwave Oven 40%o Chest Freezers 45%o Air Conditioners 15%



3.2 Major Market of Dawlance:

In Pakistan Dawlance has maximum market share and it is the leader in home appliances industry in Pakistan.Middle East is also a big market for the

3.3 Promotion strategies of Dawlance:

3.3.1 Push Strategy:

It is promotion program primarily aimed at dealers in which company focuses to sell the

product. In past Dawlance used this strategy and gave more and more incentives to

dealers to increase sales.

3.3.2 Pull Strategy:

It is another strategy aimed at final customer. Now a day’s Dawlance is using Pull

strategy by improving product quality. For Example: Dawlance is using DANFOSS

compressor in its appliances. Dawlance spend its 3% of sales on promotion.

3.4 Competitive Strategy:

According to AUTHER D. LITTLE a company will occupy one of the following

competitive strategy. For example, Dominant, Strong, Favorable, Tenable, Weak, Non-

viable. Dawlance is a market leader in Home appliances industry in Pakistan and it

occupy Dominant class.



3.5 Comparison between Dawlance and PEL:

The comparison has been made with PEL because Dawlance is market leader and PEL is challenger.

3.5.1 Innovation:

Dawlance has high innovative process. PEL has also high innovative process but it is not as Dawlance has.

3.5.2 MARKET LEADER:

Dawlance is market leader and PEL is challenger.

3.5.3 PRODUCT RANGE:

Dawlance has 20 to 24 products in the market which doing very good business and PEL has 15 products in the market with good market reputation.



Chapter # 4

Major Departments in Dawlance:

o Human Resourceo Financeo Accountso Marketingo Administrationo Supply Chain Managemento KAM (key account management)

4.1 Key Account Management Practices:

( we are discussing it here because it is new concept and effective for supply chain)

Last year the Dawlance Company has introduced KAM program named “key account management scheme” in the market place. All other actors in home appliance market are still lagging behind and using traditional sales approaches.

To survive in the dynamic marketplaces, companies need to develop the strategies that can stay alive in the changing marketplace. They must develop relationships with suppliers and distributors, investors, customers and other key companies and people in the market.



4.1.1 Benefits of Key Account Management

Suppliers and customers Benefits

o Protect existing volume baseo Better serviceo Realize incremental volumeo Faster communicationo Increase account penetrationo Better decisionso Increase market penetrationo Easy access to suppliero Gain operational efficiencieso Better supplier knowledgeo Gain competitive knowledgeo Greater trusto Product development ideaso Continuity

4.1.2 Frameworks for KAM Practices

o Informal capabilitieso Hidden discountso Service levelo Priority ino complaintso Price pollso Credits dayso limits



4.1.3 Selecting suitable strategiesFor the key accounts

o Collaborationo Negotiationo Administrationo Accommodationo Submissiono Domination

4.1.4 Analyzing key accounts

o Buying behavioro Information exchangeo Buying frequencyo Complaintso Switching costs



Chapter# 3

SUPPLY CHAIN OPERATIONS IN DAWLANCE

Dawlance has separate department for Supply Chain Activities. It is responsible for the procurement, warehousing, distribution, transportation etc.

5.1 Types of Material Purchased by The Dawlance:

5.1.1 IMPORTS

o Insulation Chemicalso Crystal sheetso Depoxyo Epoxyo Compressoro Copper pipeo Thermostato Monogram o Bulbo

5.1.2 LOCAL PURCHASES:

o Gas kitso Tape Consumable Plastic sheetso Handleo Knobso Wheelo Wracks etc



5.2 SUPPLIERS:

Dawlance have both national and international suppliers.

From national suppliers Dawlance purchase chemicals, plastic, copper, but from international usually purchase electric items and mostly these are finished goods at their level like motors, compressor, etc

Dawlance has a list of its suppliers, which is selected after fully information. If anyone supplier is unable to provide quality of material, timely delivery that vendor disqualify for the next procurement. No tender call for the procurement Dawlance itself approach up to the suppliers.Dawlance import AC and Microwave as finish good just give its brand name (monogram), but other household items manufactured by Dawlance itself

5.2.1 Name of Suppliers:

5.2.1.1 National:

o NORANI Traders Karachio KAGHAN Traders Karachio Ali Ahmed traders Islamabad

5.2.1.2 International (from the origin of):

o Chinao Japano USAo Germanyo Italy



5.3 MANUFACTURING:

Production Location of Dawlance is in Karachi and Hyderabad. Dawlance manufacture refrigerator, Deep freezers, washing machine, TV.

Dawlance purchase raw material and manufacture boxes, doors, used in the refrigerators, washing machine.

Due to lake of technology in Pakistan home Appliances Industry Import Microwave and AC. Dawlance also import both AC and Microwave.

5.4 WAREHOUSE:

Dawlance possess very effective logistics system with 16 big warehouses all over the country for the prompt (responsive) execution of sales invoices. Hence Dawlance products are available almost in all the cities and small towns as well. For cost saving Dawlance shift its warehouse from Islamabad and Peshawar to WAHCANT.

5.4.1 Inventory Management:

Dawlance manufacture only in Karachi Hyderabad which shows it is using Centralized inventory policy it is cost reducing for the company.For the uncertainty company keep some extra inventory as a backup as in case of the murder of Benazir Bhutto.It is named as Emergency Stock for the company.



5.5 DISTRIBUTERS, DEALERS AND OPERATIONAL CENTERS

Dawlance is using out source for the transportation of the goods from factory to the warehouse and from warehouse to the retail store on the in house source.

o There are 800 dealers in the country that is 80% of the total national dealers.

o There are 16 operational centers (Branches) to operate this large dealer network all over the country.

5.5.1 Consideration for Allotment of dealership:

o Financial backgroundo Location of outleto Experience and knowledge of dealero Dealers attitudeo Good will

5.6 Transportation:

Dawlance uses out sources from factory to warehouse for product transportation and from warehouse Dawlance have its own vehicles.From Karachi to all over the country by truck which are provided by the good transportation companies.



5.7 RETAILERS:

Dawlance has exclusive retailers and individual show rooms which are 800 in nearly all parts of the country with the service center.

Retailer must purchase Rs: 20,000,000 at first on cash company gives benefits to those retailers who sale products in short time. After first purchase company gives material on 15% credit.

5.8 CUSTOMERS:

Dawlance manufacture products for everyone,

Up to Middle, Upper Class of Pakistan.For rapid delivery Dawlance established a huge network of warehouses and retail stores in all over the country.

5.8.1 AFTER SALE SERVICES

The service centers are present where company dealers exist. There are 20 company’s own service centers and 40 contract workshops in remote areas to provide timely and effective customer service.



Chapter # 6 ANALYSIS

6.1SWOT ANALYSIS:

6.1.1 Strengths:

o Strong brand equityo Market leader in Home appliances industryo Quality of producto Large dealers networko Warehouses covering all areaso KAM practices

6.1.2 Weaknesses :

o Focusing only on Refrigeratorso Short product line

6.1.3 Opportunities:

o Decentralized production which can save cost of transportation and storage.o Product line expansion.o Get technology for the production of AC and Microwave which is still not

available in Pakistan.o Export can be increased

6.1.4 Threats:

o Cheap product of chinao Energy crises in Pakistan



6.2 PEST ANALYSIS:

6.2.1 Political Environment:

o There is uncertain political environment in Pakistan due to this uncertain political condition foreign investors are not interested in Pakistani market.

o There is no check and balance by Govt. on importers any dealer can import anything.

o 15% subsidy is given by china to exporters there is no such thing in Pakistan

6.2.2 Economic Environment:

o There is a great boost in construction sector in Pakistan so large demand of home appliances is present

o Per capita income in Pakistan has increased so demand of home appliances is also increased.

o Literacy rate is also increased up to 54%o Cost of production and import is very high.

6.2.3 Social Environment:

o People become more price conscious.

o People like energy savers like splits

o In country like Pakistan the use of AC is huge because of the large summer season of 8 months. Upper and middle class use AC.

o Companies are becoming more social responsible as they have introduced Antibacterial and anti dust filters.

6.2.4 Technological Environment:

o Product innovation increases the competition and decreases the product life cycle.

o In AC technology is getting change day by day



Chapter # 7

Suggestions and Recommendations:

Dawlance is A market leader in Pakistan home appliances industry having maximum market share. Now Dawlance should become strong innovator get technology for the production of AC and Microwave oven in Pakistan.Dawlance should increase its production capacity by having new factory in Punjab which will be cost saving from storage and transportation from Karachi to Lahore, Islamabad.Dawlance should increase market share in Air Conditioner market now Pakistan is a big market for AC usage.



References:

www.dawlance.com.pkwww.answer.comwww.scribd.comMr. Farrukh Branch Manager Dawlance Service Center G-7 IslamabadCell # 03335360987


http://www.answer.com/



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Supply chain for Dawlwnce

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