INTRODUCTION
PAK ELECTRON LTD. was established in 1956 with the technical collaboration of M/S AEG, West Germany. It is the oldest composite electrical equipment-manufacturing unit of Pakistan with the object of initially producing transformers, switchgears and electric motors. In 1962 after conclusion of joint venture agreement with AEG, total shareholding was purchased than by sponsors M/S Malik Brothers Limited.
In October 1978, PEL was taken over by SAIGOL GROUP OF COMPANIES, which is the largest and well-know industrial and commercial group in Pakistan. The Saigol Group belongs to the Saigol family that is an old business family and has contributed a lot towards Pakistan’s industrial and believes in continuous development and growth. The result is a global business activity monitored through the various offices worldwide. Meeting Saigol’s traditions, since its takeover by the group, PEL is also a Company on the go”. The high growth rate proves the complete success of the professional management and provides sufficient confidence to trust in its future development schemes.
PEL SYMBOL OF QUALITY:
The products manufactured by PEL have always been of a high standard and the name PEL is synonymous with QUALITY all over the Pakistan and abroad. In fact “PEL” has been more than an industrial unit. It has been acting as an institution working for the advancement and development of the electrical engineering know-how and technology in the country. Through its apprenticeship scheme and training programs for the engineers and technicians, it has produced hundreds of skilled workers and technicians who have exhibited high proficiency in their profession, both in and outside of Pakistan.
PEL equipment has been used in numerous power projects of National importance within Pakistan over the years and PEL has had the privilege of getting its equipment approved and certified from well-reputed international consultants such as:
Preece, Cardew And Rider, England.
Harza Engineering Company, U.S.A.
Snam Progetti, Italy.
Societe Dumez, France.
Miner & Miner International Inc. U.S.A.
Ensa, France.
Subsequently, PEL developed portable “Generating Sets” of various capacities for the Army use and entered in the face of manufacturing equipment meeting strict Army standards.
PEL SELECTION FOR VITAL PROJECTS:
At the same time within Pakistan, PEL equipment was chosen for such vital projects as “Mangla Power Station” and “Tarbela Power Station” and PEL for the first time in Pakistan developed dry type power transformers up to 750 KVA rating, meeting high safety standards.
EXPORTING:
It was from the early 1970’s that PEL has been exporting its power equipment to the overseas market like Saudi Arabia, Dubai, Abu Dhabi, Qatar, Sri Lanka, Nepal etc. due to its quality. Later on PEL supplied electrical equipment to various other countries in the Middle East, Far East and the other countries of Africa with great success.
INTRODUCTION OF THE POWER DIVISION
PEL’s Power Division manufactures Transformers, switchgears, Electric Motors, Energy Meters, Kiosks, Compact Stations, Shunt Capacitor Banks, etc. of highest quality and of latest international Standards. PEL is one of the major electrical equipment suppliers to Water and Power Development Authority (WAPDA), and Karachi Electrical Supply Corporation (KESC) which are the largest Power Companies in Pakistan. In addition PEL is also supplying to major projects in the private sector.
Equipment manufactured by PEL is installed in large projects such as Mangla Power Station, Tarbela Power Station and Combined Cycle Power Station Kot Addu etc.
DISTRIBUTION TRANSFORMER
PEL’s first major power product being produced since 1965 is DISTRIBUTION TRANSFORMER, up to 33KV and 5000KVA capacity. These oil-immersed transformers are suitable for both indoor and outdoor installation, being manufactured as per I.E.C. 76, BSS 171 or VDE 0532 standards. Sealed tank designs are available up to 200 KVA, while all larger sizes are conservator type. PEL transformers have been tested in KEMA labs (Holland), against short Circuit Withstand in addition to routine, Type and Impulse Tests in Pakistan.
Besides the standard 11/0.415KV transformers, PEL also manufactures 33/11KV transformers up to 5000KVA, Pad Mounted Transformers, Kiaosks, Dry Type Transformers, Special Furnace Transformers and Silicon Oil Transformers etc.
Motors
PEL’s third power product is Single Phase and Three Phase Induction Motors being manufactured in 35 models up to 40 horse power range. PEL’s totally enclosed fan-cooled motors are suitable for operation under extreme climate conditions. Its robust design and special enclosure offers effective protection against dirt and humidity. These motors are designed and manufactured according to IEC, VDE/BSS Standards. PEL’s Motors are most suitable for Spinning Mills, Power Looms, Ginning Factories, Oil Expellers, Cement, and Sugar and Chemical Plants, Tube Well etc.
Meters:
The fourth Power Product is the tech, high quality Single-Phase watt-hour Meters being produced under license from M/s. A.B.B, Power T&D Company U.S.A. in the range 10-40 Amps and rated 240 Volts.
The biggest bottleneck is setting up a facility in Pakistan is the lack of orders, their small national requirement and WAPDA’s and KESC’s purchases through International Tenders. It is impossible for a local company to match the dumping prices of Eastern/Western European Companies. Without the Government, KESC and WAPDA’s proper patronage it is difficult to meet success quickly. The company has an in-house compute, which continuously helps in improving designs, material inventory control and project implementation schedules.
INTRODUCTION OF THE APPLIANCES DIVISION
ESTABLISHMENT:
The appliances Division was established in 1980-81 when the Company launched the first consumer product to its production range i.e. Window Type Air conditioners of 19000 BTU.
The manufacturing of Refrigerators and Deep freezers was started in 1986-87, in technical collaboration with M/S SILTAL SPA (ITALY) and M/S ARISTON (ITALY) respectively. The consumers also very well received these products, keeping in view the customer needs and changing market trends the refrigeration line was completely revamped In 1994.
In May 1993, PEL set up a high-tech Compressor manufacturing facility, the first such plant in Pakistan to produce all types of compressors for Refrigerators and Deep Freezer, in collaboration with NEC of Italy. But PEL was not able to operate the compressor department cost effectively in the long run so in the end of 1998 they closed down this department.
In 1993 another joint venture was started with DAEWOO Electronics, and a new company PEL-DAEWOO Electronics Ltd. was formed to produce Color Televisions. PEL-DAEWOO Electronics Ltd. established its production facilities at Hattar industrial estate located at about 55 Kms from Islamabad. The facility is producing world class color television in 14, 20 and 21 inches screen sizes. The plant is one of the latest and most moderns in Pakistan and is capable of producing TV sets of international standards with an annual capacity of 100,000 color TV sets. But because of tough competition with PEL televisions were unable to get a favorable response from market that’s why now PEL has closed the operations.
AIR CONDITIONERS: PEL Started The Manufacturing Of Window Type Air Conditioner Under The Brand Name “PEL” In Technical Collaboration With General Corporation Of Japan. This Air Conditioner Had Become The Well Known And No.1 Within No Time Because Of Its Quality And Performance. With PEL’s Dedicated Efforts In Quality Control And Customer Service, This Product Has Been Still Is The Market Leader In The Air Conditioner Market Of Pakistan, With A Market Share Of Approximately 42%. PEL Air Conditioners Have Been Specially Designed For Countries Like Pakistan Keeping In View The Requirements Of A Machine That Has To Function In Climatic Conditions Of Varying Humidity, High Air Dust Level, Extreme Temperatures And Local Power Supply Conditions. And All These Efforts Have Resulted In A New Super Efficient, Reliable Air Conditioner Ideal For The Local Conditions.
A new model of air conditioner Split has been developed and tested successfully in last year, and it is now in 1997 has been successfully launched to the market. These two types of products are:
Window Type Air-conditioners.
Split Type Air-conditioners.
Both of these products are well received and encouraged by the customers. And they are also trying to develop new colors and shapes of the AC
Currently the window type air conditioners are available in 3 models namely:
1) PAC 120Q = 12000BTU (1 Ton)
2) PAC 190Q = 19000BTU (1.5 Ton)
3) PAC 240Q = 24000BTU (2 Ton)
There are two frill colors available i.e. (a) Brown (b) White colored grills, for the customer’s choice.
REFRIGERATORS:
PEL Refrigerators called “PEL COOL” are specially designed to work most efficiently under the extreme climate conditions of Pakistan. These refrigerators are suitable for our environmental conditions. Special consideration have been given to the latest styling trends and changing market demands to get a better consumer response. Production of Refrigerators in three different colors i.e. Green, Blue and White and six different models from 180 liters to 410 liters 1 single door and double door designs, provides the consumer with a variety to select from according his needs and taste.
Following models of refrigerators are available in the market:
(a) PR 19-ID (b) PR 23-2D
(c) PR 25-2D (d) PR 30-2D
(e) PR 41-2D (f) PR 43-2D
A new range of refrigerators was introduced in early 1997 with new features such as VCM finish, stylish concealed handles with matching trims and a new auto drain system. These Refrigerators called “PEL ULTRA” are available in six different models and are readily available in seven decent colors i.e. Green, Light Green, Gray, Sandy Beige in PCM finish and Light Gray, Blue Green and Light Brown in VCM finish, thus giving the customers a wide range of models and colors to suit their needs & requirements. Now “PEL CRYSTAL” modals are also available in the market. Following range of refrigerators is available & their prices are from 15100 to 27000.
PC2008 PCM PC2010 PCM
PC2012 PCM PC2014 PCM
PC2015 PCM PC2017 PCM
PC2010 VCM PC2012 VCM
PC2014 VCM PC2015 VCM
PC2017 VCM
Further more, the Research and Development Department is developing a 220 Liters (Double Doors) model to be introduced in the market during the current year along with other various models, this being a continuous process. The work is proceeding on the development of various new models, which would be available in the market in the coming years.
DEEP FREEZERS:
During the year 1986-87, PEL introduced in the market Chest Type Deep freezers called “PEL FREEZE”. The units are design to give a highly level of performance during the extreme climatic conditions of Pakistan. Their special features being equipped with total refrigeration systems, hammered aluminum lining and special pressure stabilizers have also made them an immediate success in the market. Production of Deep Freezers in two different colors i.e. white and off-white, and six different models i.e. from 175 liters to 410 liters in Single Door and Twin Door Designs, give the consumer a variety to select from.
PEL Deep Freezers, currently manufactured by PEL Appliances Limited are tow types:
Single Door, which has three, models:
PDF 175 L, PDF 290 L & PDF 370 L.
Twin Freezer, which has two, models:
PDF 370 Twin & PDF 410 Twin.
PEL Twin is the first Twin Freezer in Pakistan that can be used domestically as well as commercially. The high quality of PEL FREEZERS is adding premier names to PEL’s customer list such as Lever Brothers Pakistan Limited who has opted to use PEL Freezers to launch their new product, Wall’s Ice Cream. The vertical Deep Freezers has been designed and to be introduced in the market in the future.
COMPRESSORS
The product received an instant acceptability from the market. In the beginning PEL anticipated that because of governmental policies. The import of compressors shall be banned and PEL will then be only one company which shall be producing the compressors not only for their own appliances but they shall also be able to sell these compressors to the other companies in the market. But unfortunately this did not happened, instead of increasing the duties over the product the government withdrew the duties in succession. As a result of that PEL was not able to operate the compressor department cost effectively in the long run so in the end of 1998 they closed down this department and started importing the compressors.
THE COMPANY’S CONSOLIDATIONS
PAK ELEKTRON LIMITED the holding company. PEL APPLIANCES LIMITED (PEL) the subsidiary company. PEL DAEWOO ELECTRONICS LIMITED the subsidiary and a joint venture with DAEWOO Electronics Company Limited, Korea.COMPANY’S MISSION STATEMENT
To grow the size of the organization, develop better business practice and build-up greater resources.
To practice actively and consistently in Pakistan’s economic development.
To build up better operating philosophy.
To build a better commercial outlook for operating successfully in this competitive environment.
To keep pleasant working environment.
To always maintain exclusive service standards.
To promote professional co-operation.
To motivate the employees by making them feel that management cares about them by recognizing their efforts by remuneration or by promotion depending on the individual efficiency and what he deserves.
To create feeling of co-operation so that all employees are satisfied.
To build up customer satisfaction.
To provide wide range of products and services to customers.
COMPANY’S OBJECTIVES:
The continuous improvement of all products and services through total involvement of employees.
The development and strengthening of joint ventures and partnerships with external and internal customers and suppliers.
Providing innovative and higher quality products to achieve total customer satisfaction by understanding their requirements and anticipating their future expectations or needs through:
Monitoring Annual Targets for quality improvement in all areas and function of the organization.
Valuing people by understanding and drawing upon their strengths i.e. abilities and knowledge and make efforts for their training and development.
With a dedicated team of professionals the company is striving to improve the quality of life in Pakistan homes through reliable equipment for power distribution and home appliances.
The growth in the size of the organization develops better business practices and builds up greater resources.
Total Quality Management implementation for getting ISO 9002 for their other products.
The aspiration to capture the complete product family of the product.
LOCAL MARKET SITUATION:
SHRINKING MARKET:
Because of the reduced purchasing power of the consumers after 1996 there is a lot of potential for the 2nd hand purchasing which hit the new appliance market of the company.
Though PEL has offered many attractive customer packages like after sales services and the compressor warranty of 5-years.
INCREASED TAXES:
The taxes are increasing as ever, the devaluation of currency has turned the situation into worst. Since most of the items are being imported so its is bearing an ever increasing cost of production. At some stage in 1997 to get rid of the stock the company sell its products at no profit no loss basis.
CHANGING TECHNOLOGY:
There are a lot of twists in the market about the technology so even too compete In the market the market the company has to work very hard.
For example:
In case of the appliances ;PEL has introduced several models during the last two years.
In December 1997---------- PEL refrigerator
In January 1997---------- PEL ultra
In December 1998---------- PEL Crystal
COMPETITIVE PRIORITIES:
COST:
Low cost
QUALITY:
Consistent quality with high class appliance performance
FLEXIBILITY:
A lot of volume, equipment and workforce flexibility is present
LOCATION
PAK ELEKTRON was set up in 1956, at that time the location site was selected outside Lahore City 14km Ferozpur road, Kot Lakhpat Industrial Area. The site for the purposes of the operation was selected by adopting the judgmental method and no sophisticated technique was utilized. The following were the dominant factors, which moved the management to select the site for the facility location. CONSTRUCTION
The major cost involved in any organization is in the shape of the construction costs. That took a large amount. But at that time the labor was available at the cheaper rate. Due to which the site was selected at that place.
TAXES AND REAL ESTATE COSTS
At that time that area was free from the sale tax by the policy of the Govt. The second factor was that the real estate’s cost was too much lower as compared to the main area in the city. That was the other main reason for the selection of the site.
FAVORABLE LABOR CLIMATE
The labor plays an important role in the selection of the labor-intensive company. So the main reason for the selection of the site outside city was that the labor was available at the cheaper rate.
NEW LOCATION FACILITY
Later in the early 1990’s PEL expanded its business from mere power products to the appliances Division selected two sites of the Godown; Amazai and Hatter. Again they have utilized the judgmental approach to select the site for the location again. The location is at a long distance from the market of the company but the only motive, which is in favor of the decision, is the government Tax Free Zone Policy to develop the industrial infrastructure in the country.
CAPACITY
“Capacity is the maximum rate of output for a facility”.
CAPACITY MEASURE
In every department PEL has got several machines which are used in the production of various appliances and electrical equipment whose capacity is measured in term of the output measures.
BOTTLE NECK
In the whole production process there are certain stages, which are more time consuming than the others. So this limits the out put rate to a minimum level to that which was expected.
In the process of the refrigerator manufacturing the bottleneck is created at the thermo foaming machine.
In the process; from base making to the packing at the stage of the foaming this bottleneck is created.
BASE MAKING
CABINET MAKING
FOAMING
QUALITY
PACKING
CAPACITY STRATEGIES
CAPACITY CUSHION
On the average each department has the capacity cushion which varies from 5% to 15%
ECONOMIES OF SCALE
PEL is trying to reduce its cost through enjoying the economies of scales in his processes. Because of the purchasing in the bulk and using the activities as the measure of the overhead charges PEL has been successful in reducing
The cost of materials
The cost struck in the processes
The cost in the overhead.
Reason for winding up of compressor business:
In case of compressors the company failed to get economies of scale that’s why they have closed the manufacturing of compressor. MR.FARYAL the production engineer has told me that to get the economies of scale or to cover the fixed expenses they must have to produce 3,50,000 compressors, where as their internal consumption is 1,00,000 compressors, so they must have to sell 1,50,000 compressors ( 60 % ) in outside market. But at out side their compressor’s demand is not as much as required. So as a result they have closed their business of compressor.
PRODUCTION DEPARTMENT PROCESS
The production department of PEL is manufacturing two finished products.
(1)Refrigerator
(2)Compressor
All the operations of the production department are taking place with the help of machinery. In production department there are total 550 workers, which are subdivided according to the sub-sections. The production takes places after the issuance of Annual Sales Plan by Marketing Department. When the production department receives that plan then the next step is to prepare a Annual Production Plan. This annual production plan is then further divided into monthly plans that are called Operational Plans. The operational plans further down filtered to the weekly plans, which ultimately result in the daily production. On the average, the production of refrigerator is 250 per day with some variation.
The refrigerator, called “PEL COOL” is specially designed to work most efficiently under the extreme climatic conditions of Pakistan. The 313 components are required to make a refrigerator. First of all the Research & Development technically develops a single refrigerator that is manufactured in thousands by the production department in different models and colors. All the specifications about machinery and product are taken from the Engineering and R & d departments.
The production department is also manufacturing the high-tec compressors for refrigerators and deep – freezers. It is the first such plant in Pakistan that is manufacturing all types of compressors for refrigerators and for deep-freezers.
The production department of PEL has following sub-sections.
* Compressor Section * Dyes & Molding Section
* Press – Shop * Plastic Injection Molding
* Paint Section * Refrigerator Assembly Line
The Details of the operations and functions of each section is as follows.
1. COMPRESSOR SECTION
Here in this section the compressors of finest quality are manufactured. PEL is the only company to produce all types of compressors. This section is currently manufacturing the compressors for:
Refrigerator
Deep- freezers
The basic feature of the compressor i.e. quality is the result of high-tec or professionalism.
2. DYES & MOLDING SECTION
This sub-section involves the production of the different dyes. The R & Ddepartment develops the design of the different dyes, to be used in the preparation of different plastic parts in the press-shop. It fabricates the dyes and molds them according to their specifications. The check of the quality department is of greater importance at this stage, because all the further operations are depending upon these dyes. In this department 40 workers are working and all are very well equipped. The machinery that is being used in this section has been imported from Italy after the technical collaboration with M/s SIRTAL SPA and M/s ARISTON respectively. Material department on the request of the production department purchases the material for these dyes.
3. PRESS- SHOP
When the dyes are handed over to the press-shop, now the production of sheet metal parts starts in press-shop. This section is very important because the parts, to be assembled for refrigerator, are manufactured here.
The operational procedure is very simple. The P & deptt. Provides them the sheet that is called “G-1 Sheet” or “ Gisti chadar”. It is provided in bulks to refrigerators. And it is also called the in-house manufacturing because many of the parts are manufacturing by it now these sheets go down under a operational process and results in different parts. The main operations, which are performed on these sheets, are mainly:
* Cleaning * Fabrication
* Cutting * Putting in dyes
* Molding * Quality inspection
* Final cleaning with gasses and * Ready for paint liquids
Now all these parts are ready for assembling. The main parts are:
Body of the Refrigerator
Aluminum pipe
Copper pipe
PLASTIC INJECTION MOLDING SECTION
This department is responsible mainly for the manufacturing] of big Sheet Metal Parts and of plastic parts. Here the huge and costly machinery is installed and all is imported form Italy. In this section 30 workers are highly qualified technicians. The operational activities of this section is almost the same as of press-shop i.e. cutting, cleaning and fabrication etc. The only difference is that in press-shop the dyes are used but in Plastic injection molding section, the high-tech machinery is used. This department is also using iron and still.
4. PAINT SECTION
When the different components are prepared by Plastic injection molding and from press-shop, these are sent to the pint section for paint purposes. This refrigerator. Here the control of quality is very important because the components should not have any fade color or any other damage, so the quality control has some standards through which they are checking the paint section the production department. So the operations in paint section mainly consists of:
* Washing of Parts. * Paint
* Pressure of hot air * Final cleaning and touch in
5. REFRIGERATOR ASSEMBLY LINE
Here in this section the different 313 components are assembled to make a refrigerator. The assembly of the different parts is done by machinery. The main parts, which are involved in a refrigerator, are:
[1] FREEZER: The freezer, which the production department is currently using, is of two types.
* In-house
* Imported
This section is assembling both types of freezers in the refrigerator and both have the same quality.
[2] BODY
The body of the refrigerator is also in – house manufactured. Press – shop, produces the plastic body and the plastic injection molding section is producing the upper body or steel body.
[3] COMPRESSOR
Compressor is the dynamic part of the refrigerator, which actually worked in a refrigerator. Al other parts in a refrigerator are static ones.
[4] EVAPORATOR
This is the part, which has the function of absorbing the heat from the compressor and from all other parts.
[5] CONDENSOR
Now when the evaporator absorbed the head, now the condenser works as a ejector of heat from the refrigerator.
[6] DOORS
The doors of the refrigerator are also in-house manufactured.
REFRIGERATOR ASSEMBLY LINE: When all the components are transferred to the refrigerator assembly line, the assembly of the parts is done by Assembly line. This section has further seven sub-sections.
Thermo Forming Section
Pre-Assembly Section (a)
Pre – Assembly Section (b)
Foaming Section
Assembly Line Section
Door Assembly
Final Line Section
Final Inspection Section
Packing Section
The process design in the assembly line of refrigerator consists of the following operations.
THERMO FORMING SECTION
The process starts from this section.
In this section all the parts are checked by the quality control department and if there is any discrepancy, it resolved or removed with the help of Forming operation.
Many parts of the refrigerator, which are imported from Italy, are passed through by this forming operation. The damaged parts and components are repaired in thermo forming section.
PRE- ASSEMBLY SECTION [A]
On the arrival of the parts in this section, during assembly certain operations are performed by technical individuals, are as follows:
[1] CLEANING OF BODY
Here some dust- removing workers clean the body of Refrigerator.
[2] ASSEMBLY OF SHEET METAL PARTS
Here The Sheet Metal parts are assembled with body through tape.
[3] ASSEMBLING OF OTHER PLASTIC PARTS
Here the assembly of other parts is done. For Assembly purposes, the tape issued, not even a single screw is used here.
[4] ASSEMBLY OF FREEZER:-
After the assembling of all plastic parts, the freezer is assembled with the body. It is also done with the help of tape.
PRE- ASSEMBLY SECTION [B]
After the assembling of plastic parts and of freezer, the body is sent to this section. The following are the operations that are performed in this section.
[5] COVER OF FREEZER
Here the cover of freezer is placed. It is done with the use of tape.
[6] FREEZER COVER TIGHTENING
Now then cover of the freezer is tightened through screws for protection purposes.
FOAMING SECTION
Here the following operations are taking place.
[7] THROUGH CHECKING OF BODY: Here the body with all its plastic parts and freezer is inspected so that it can be free from all faults. Here the freezer and its body is checked with the help of heavy machines so that it don’t have any looseness.
[8] INSULATION
Here the whole body is passed through the machinery, for he insulation of the tape. Here machines automatically inject the liquid, which holds the parts together.
[9] GAS INJECTION
Here the special is injected in parts with help of imported machinery.
ASSEMBLY LINE SECTION
Here the compressor and other parts are assembled and the following operations are performed.
[10] COMPRESSOR ASSEMBLING
Here the compressor is assembled and tightened with the help of screws.
[11] COOLING CIRCUIT
After compressor assembling, the cooling circuit is fitted with the body.
[12] ELECTRICAL CHECKING
Here the installed electrical machine checks all the components of the refrigerator.
[13] LEAKAGE DETECTION
Here the gas leakage detector is use to detect any flaw in the gas supply. The refrigerator is tested for a complete night for the detection of gas leakages.
FINAL LINE SECTION: -
This section performs multiple operations, which are discussed below.
[14] PLASTIC MEGNAT
Here the plastic magnet is put into the rubber of the body and of the door. This plastic magnet is imported form Italy.
[15] RUBBER COUPLING
Here the rubber with plastic magnet is coupled and joined with the body and with the door.
[16] ACCESSORIES PLACEMENT
Here the different accessories are placed in the refrigerator for customer use. The main accessories are:
* Plastic boxed * Plastic sheets
* Buttons * Bulbs
* Wires * Covers
DOOR ASSEMBLY SECTION
This section has following operations
[17] ALIGNMENT OF STEEL PARTS WITH THE DOOR
Here the steel parts are aligned and tightened with the door.
[18] DOOR TIGHTENING
Now the door is tightened with the body with the help of screws.
FINAL INSPECTION SECTION
Here the refrigerator is thoroughly and finally inspected. The operations include.
[19] OPERATIONAL/ FUNCTIONAL TESTING
Here a refrigerator is operationally/ functionally tested. It is operated for a whole day.
[20] QUALITY CONTROL CHECKING
Here the quality assurance is checked. The refrigerator is checked technically and physically by quality control.
PACKING SECTION: -
Now the refrigerator is ready for packing after quality control checking. So the refrigerators are packed according to their models and colors, and delivered to the Storeroom.
FORCASTING
DEMAND FORECASTING
“A forecast is the prediction of future events used for the planning purposes”.
PEL is also using this technique for the purpose of the getting the idea of the demand. The basic demand of power division is coming from the KESC and from eight divisions of WAPDA. They are the major customers of the company. The other customers of the company are those industries, which have their own power plants.
FORECASTING TECHNIQUES
There the three forecasting techniques are available for the purpose of the forecasting of the demand, which are as under.
Judgmental Method.
Causal Method.
Time Series Method.
The usage of these techniques depends upon the availability of the data about the past. PEL is the company on go.FORECASTING AT PEL
The forecasting technique, which is being followed by PEL is the qualitative technique.
JUDGEMENTAL METHOS
The main reason for the selection of this method of the forecasting is that they do not have the data for the past. The following are the methods, which they are utilizing for the purpose of the demand estimation under the Judgmental Method.
SALES FORCE ESTIMATE
Sales force estimate of forecasts compiled by the members of the company’s sales force (their dealers in each region) about the future demand of the product. They are using this technique because they believe that their estimates are correct since the dealers are much near to the market. MARKETING DEPATMENT is actually involved much in forecasting. They observe the trend of the market and they set their target of sale then they tell to the production that what is their target then production department make productions according to the target set by marketing department.
Target set by the marketing department for this year up till JULY,31 is given below:
One more thing which is interesting is that demand of different colors of refrigerators is different in different regions.
NAIVE METHOD
This is the simplest method of the forecasting. PEL gets their demand forecast by this method with it. They see the previous year’s demand coming from the WAPDA, KESC and the other new companies. Then if any change is coming in their demand that is also being incorporated
by them. The demand from the new industries is taken from the sanctioning of the loans by the financial institutions.
MATERIAL MANAGEMENT
MATERIAL MANAGEMENT
“ Material management is concerned about short range decisions about supplies, inventories, production level, staffing patterns, schedules and distribution”.
Decisions in these areas affect the whole of the organization, Either directly or indirectly.
IMPORTANCE OF THE MATERIALS MANAGEMENT
Because the whole of the organization depends upon the materials so it is very important. The other reason behind it is that if of short range so it desires more of the attention of the management. It is important for the PEL also.
The following are the reasons due to which the PEL gives more important to the materials management.
Central Role of the Materials
As the PEL is a manufacturing organization so they need the raw material for the purpose of the production from the country as need as well as the foreign countries. This material takes round about the 70% of the resources of the organization.
Impact of Inventory on Profitability
The other reason is the impact of it on the profitability of the organization. As you keep more inventories you will be bearing much more cost of holding.
FUNCTIONS OF THE MATERIAL MANAGEMENT.
The Planning and Procurement Department in the PEL are performing the functions relating to the materials.
PURCHASING
They have already made the Annual Production Plan through the analysis now the people concerned with the purchasing make decision about the inventory; they make planning about the following heads.
Imports
Local buying
In house material
IMPORTS
The company imports 60% of the material. Purchase department is responsible about this section & analyzing the bill of quality (BOQ). The engineering department specifies the per unit quality in BOQ. In this way they get the idea about the inventory needed for the next year production.
They give the specification and get the reasonable supplies. Then import in charge checks the supplier on the major factor of price. The purchase department of the PEL is responsible to maintain the one-month inventory of imported material to meet the unfair circumstances.
LOCAL BUYING
Local buying is also very important for the power division. Local buying is also based upon the Bill of quantity (BOQ).
For the local buying two categories are very important for the company and company should handle these two categories in their best way.
Suppliers
Vendors
Suppliers
Purchasing is like the beat of the heart for organization in the supplier market place, continuously seeking better buys and new material from supplier for the selection of supplies they care about three things price, quality & delivery. Supplier provides ready-made material.
Vendors
Vendors are also supplier but when they are under the ISO 9000 then they become vendors. Vendors make the material according to the instructions of the company. The company must inform the vendors 20 to 25 days before the requirement. Local inventory is stock for at least 3 months in the store dept. because of the products seasonal demand.
In House Production
They get material through import & local buying & also make material in the company, which is used in production. When they analyze that the in house production is better for then they get the material through in house production plastic inception-molding dept. is one example while the other one is the PEL compressor. Till the time the company found it feasible to make them in house they did it but as soon as they found them infeasible they starting importing them from U.S.A in recent times.
SUPPLIER SELECTION
For the success of the company supplier or vendor are biggest contributor. The PEL is very conscious about their supplier. To evaluate the supplier PEL maintain a separate section of vendor assessment engineering dept. Is working. In the appliance division specifically they give assessment form to the supplier by which they get the reliability financial position and capability of incorporating with requirement of PEL. Then according to the design formulated by research & development, although with a prototype.
Then PEL asked the selected supplier to submit their samples. If their samples are according to the specification of the company then they will be selected and place the purchase order. Then after that this material is also inspected by quality control department if it is rejected then it will sent towards the vendor.
The company has maximum 3 & minimum 2 suppliers for each material while having prepared each supplier’s history. The supplier which has a good past performance will get the existing order, company makes the list of their supplier & check their performance on each month and give rating to them excellent, marginal and poor. The supplier who have get the marginal and poor rating the company expert work with them and try to improve their performance if the supplier do not succeed to improve their performance then company drop these supplier. Company make a list (Supplier Character action form) SCAF and evaluating the supplier.
Contracting
PEL makes a purchase order and place this purchase order for one year and with the monthly prescription so in this way the annual contract of the company makes the contracting condition quite easy and predictable but for the new supplier they give specification.
STORE DEPARTMENT
In PEL there is two types of store.
Engineering store
Chemical store
Imported products or material come by letter of credit’s (l.c.’s) Local Material or Products come by P.O. When P.O. comes to store and material is receive by the store then they issue the G.R.N. document against the P.O. and make an entry of material.
G.R.N. Document Contains
Supplier name
Comes through cash or credit
Time, vehicle, Chelan
Material specification
How much quantity come and which model
Then this G.R.N. document goes toward the quality department. Then they will inspect it and tells that how much quantity is approved.
Then this G.R.N with the material goes towards the store and storekeeper calculate the inventory and keep this material in the store.
For the proper location in the store for material they use the bin card.
Then inventory will feed in the computer and computer will give the code to the accepted material. This code is use for the recognition of the material. Then this material will pile up with the existing inventory.
Then the issuance of material comes for this purpose they use issue voucher. The department, which uses this voucher, will enter in the any process. This is required quantity and issue quantity and computer will show the unit rate, total value and remaining inventory.
► Then they receive the inventory in the shape of Finished Good (FG). Finished Good has its own warehouse and its purpose is same as store means:
► Receipts
► Issue
► Storage
They have maximum and minimum inventory level.
When they have maximum inventory stock then computer will alarm the P & P department that avoid from extra purchasing. This information’s is in the shape of receipt and the same will be case with the minimum level. In this way P & P dept. will give priority to different stock and maintain maximum & minimum level of stock.
Bulk material, components, plastic material and packing material are having the separate store and they have stock material in this way. Stock checking is also held by annually, randomly & periodically.
Store dept. has more than 60 employees and they are responsible for the scraping material. They will send “memo” to quality control dept. And explain them that due to this mistake that damage will be happened. And ask form them that we can
Use it for production or scrap them. Then quality department will Come & check this material. Then raise the indent that this Material is etc. They are answerable for all the scrap material.
TRANSPORTATION MODE
PEL is mostly using the road as the transportation mode. If they are Supplying. Their products inter city then the trucks are used. But if they are sending it to outstation then they use large trucks to send them at the price. The reason for their selection of this mode is that they have to supply to the Destination of the user or customer.
INVENTORY
INVENTORY MANAGEMENT
“ Inventory is a stock of anything held to meet the future demand of organization”.
For an organization Inventory Management is very important process.
PEL is in a seasonal business since the demand season for their product is from April to September. PEL management estimates the demand very carefully and tries to avoid the pilling of the inventory. Production of PEL jump in Feb. to April and they need more Inventories in this season. To keep the overhead charges low PEL has a small no of permanent workers which -work through out the year. However to meet the demand of the peak season the management hire the workers at the temporary basis just before the start of the season.
ASSESSMENT OF INVENTORY
For the assessment of Inventory they are using the different method. They are using the computer program & monitoring chart in this way they judge the maximum & minimum level of Inventory and by keeping an eye on this level they decide when to order. By monitoring the charts and by looking after the Inventory level, if the inventory level is less than the minimum level then computer program & monitoring chart Alarm to the Planning and procurement department to order.
They are also utilizing the economic order quantity (E.O.Q.) for the purpose of the ordering of the raw material. (Suspected)
PEL is also using the ABC Analysis for the purpose of inventory. So that more importance is given to the items who have more value. (Suspected). PEL is using FIFO inventory system.
INVENTORY CONTROL SYSTEM
The computer program, monitoring chart, E.O.Q. System & ABC Analysis can give the amount to be ordered to the supplier.
The next step is that when to reorder for the purpose of the production if the inventory the inventory goes below the limit. PEL has not designed any specific system to control the inventory but anyhow they are using the following two systems to control the inventory.
1. Continuous Review System
Whenever the number of the units is drawn out of the inventory stores they judge the position of the inventory that whether it is a time to reorder or not. In this way the inventory is controlled.
GM of store dept. makes continuous review, random checking is also done and their computer system also maintains the record of inventory and inform then about the position of the inventory.
2. Periodic Review System
The second method of inventory control system is periodic review system. In this system the inventory position is judge periodically instead of continuously.
INVENTORY SYSTEM IN PEL
PEL are using the periodic review system. They make the review charts on quarter basis and after three months they see that whether the inventory is with in the limits or not. But they told that there are limited number of suppliers & company is having a very strong relationship with them that’s why the lead time is just in HOURS therefore the system they are using is very near to JIT system.
REORDER POINT
Optimal replenish inventory system is used by PEL. In more technical terms the minimum level serves as reorder point.
For managing the Inventory of different types, The Company divides the inventory into two broad categories.
Raw material Inventory
Finished goods Inventory
1. RAW MATERIAL INVENTORY
The items of raw material, which are used by the company for the purpose of production, is divided into two categories.
RAW MATERIAL
Local Purchase Imported Raw Material
IMPORTED MATERIAL
The main materials, which are imported, are the copper coils. The inventory level of imported material is based upon 5 years forecasts and the company keeps at least 1month inventory of that material for the lead-time. The major importer of the company is Japan, Italy, Brazil, Taiwan and America. On the average the consignment coming from U.S gets 25 days to reach Pakistan and the consignment coming from European countries takes 15 days to reach Pakistan.
60% of the raw material used by the company fall under this category.
LOCAL MATERIAL
The 40% of the material required by the company fall under this category.
The items, which come under this head, are the transformers, Switchgears & energy meter. Local material is further divided into three categories.
Supplier
Vendor
In house inventory
The selection of supplier & vendor are on the basis of the clauses of ISO 9000, the lead-time and the quality of material. The inventory level is stocked for 3 months for the local inventory and the lead-time for this item is the period of the ten days.
In house inventory contains that material which is utilized in the product of PEL by their own manufacturing abilities. The most important is the Plastic Injection molding section.
1. Finished Goods
They maintain approximately no inventory in the power division. The products of power division i.e. transformer, energy meter & Switchgear. The reason behind the no maintenance of inventory is that the products are customized in nature. Therefore they have zero inventories for these items because the company is adopting make to order strategy.
In appliance division the products are seasonal in nature and management tries to maintain as minimum inventory as per requirement of their distributors. Because of their careful demand forecast and due to seasonal demand, in off-season some time they have no single Air-conditions in their stock room.
The Process of Inventory Management and the Purchase process.
The Flow of Activities:
The responsibility of production & inventory management is on the marketing departing by theirannual sales plan (ASP) on the basis of the past year performance the marketing department make annual sales plan by the approval of G.M. of the department & acceptance of the M.D. of the company. The annual sales plan involves the monthly review & the full information about the products of PEL. After making the Annual sales plan goes toward the production department and they will make changes according to their work force ability, machine capacity & production capabilities and finally make the Annual Production Plan (APP). The annual production plan is made in this way that it will absorb the fluctuation of demand and market conditions. After the approval of GM the organization has got its own distinct arrangements for purchase of raw material this will goes towards the purchase department. The process of the purchase proceeds in a manner as shown in the figure.
AGGREGATE PLANNING
AGGREGATE PLANNING
Aggregate planning is the projected statement of production rate, workforce level and inventory holding based on estimates of customer requirements and capacity limitations. This statement is time phased
Aggregate plan is based on Annual Sales Plan (ASP). On the basis of this plan, Annual production plan (APP) is made. The production plan comprises the whole strategy for one year regarding
Production rate
Workforce level
Inventory level
The production plan considers the monthly production pace by its operational production sheet.
Departments of Production, Marketing, Planning and Procurements, and personal & Administration and Finance Dept. all work with collaboration to make the plan.
LINKAGE TO OTHER PLANS
In PEL on the top of the planning is the business plan. This plan is a projected statement or income, costs and profits for the next years Including statement of balance sheet, income statement and cash flow, which shows the source and resources the company.
MATERIAL REQUIREMENT PLANNING
As such company does not prepare any formal “material requirement plan”. Reason for not preparing the plan is that the operations of the company are simple. In the Appliance division, major operations involve the assembling of parts. When the benefits of the MRP are compared against the cost and time for preparing the MRP, it is believed that the operations are too simple to use any such plan.
However it doesn’t means that no planning is done for the raw material and components material planning is done for the items that have no independent demand.
It is based on the following; three inputs, which the company is using.
B.O.M.
Production Schedule.
Inventory Records.
FLOW OF ACTIVITES
The flow of activities with respect to M.R.P. in the company.
ASP is prepared first followed by the production plan prepared by the Production Dept. From here plan goes to the P & P. Dept.
In case if marketing Dept. suggests some changes in the design and specification of the product, the requirements are mentioned to the Research and Development Dept. which then work on the projects. Dept. identifies the items required and their quantity for single product. From here the report goes to the P &P Dept., which after consulting Production Dept. place orders.
quality CONTROL
the process of quality
ISO has defined their quality standards. These standards are checked at every stage in PEL. In PEL standards of quality in manuals indicating critical quality standards.
Quality department
Its hierarchy of the quality control department is as follows:
RAW MATERIAL INSPECTION
When raw material is received the quality of raw material is inspected according to the military standards MIL_STD_105E. According to these standards if the personnel of receiving department will inspect according to the military standards. AQL4. If there is a lot of 500 and they choose 13 sample from the whole lot then they select the sample from the upper and lower and right and left side of the whole packet. It means that they select the sample by way of diversifying the area. If the 2 units of the sample are rejected then the whole lot will be rejected and if the lot is rejected then they call back the vendors and vendor check that lot again. If the lot is very much needed by the production department then they place a written request. The 100% inspection is done on it. In this case, they call the vendors or their inspectors and they check it on 100% basis. But this happens in very rare cases.
On the other hand if the lot is accepted then it is remarked as GRL (good received lot) and sent to the store. While four copies of GRL are made and sent to the following four departments:
Purchase department
Quality control department
To store
For computer entry
ASSEMBLY OR MEASUREMENT REPORT
20 clauses of ISO element give the general standards. Which are equally effective on each product but for each product firm itself from the specific standards. And 20 elements of ISO should be reflected from these standards. The auditors check it so they have to all the checking records in the shape of writing, which is checked by the auditors. It is assembly or measurement report, which contains the detailed information of each step, and all the checking is in written form. Which is again inspected at the end of year.
Formulation of Standards
Standards are formed by the combination of Research & Development dept. and quality control dept. They involve the whole organization by distributing the copies of standards.
When they make the standards if any concerned dept. will send them suggestion and on the mutual agreement they handle them. They write down the standard of each stage and if the production dept. will make a mistake then corrective form will send to them and all the procedure of ISO should be in written form and should be followed by every one balance sheet has been made and it contain the whole detail of checking.
CHANGES IN STANDARDS
It is not necessary that if it is strict then there will be flexibility in checking. If any change is come in product or system then they also change the standards. First of all they make a zero base where the documents (quality assurance produce) of beginning standards are written. If any change in product then system is changed and document 1 send towards the concern depts. And they torn out the zero document and rely on document 1. Then ECR (Engineering change report) is made and standards are written in this report. It means inspection changing and changes are under lines. A lot of changes have been made. The issuer of the documents is permitted to retain documents only for one year but other people should tear out the reports quickly. We also should not retain the quality measurement reports more than two years. We will always show the current status.
EXTERNAL & INTERNAL AUDIT
First of all internal audit is done once in a year. This is a sort of inter departmental audit. If there is any mistake then corrective form are present for them.
They will check all the things, would make remarks about mistakes and the corrective action for these mistakes. If they got the certificate then after six (6) months the ISO-9000 auditors do external audit.
QUALITY CONTROL
PEL has also got certification for its two products. They have got this certification from the Swedish firm and consultants “SGS”. They have got the 9002, which cover the area from the production to after sale services. The following are the products for which have gotten 9000 certification.
COMPRESSORS.
ENERGY METERS.
For the instrument transformers & refrigerator they are trying to get it.
QUALITY POLICY
The continuous improvement of all services through total
Involvement of all employees.
The developing and the strengthening of partnership with external and internal customers and suppliers.
Providing innovative and higher quality products and services to achieve total customer satisfaction by understanding their requirements and anticipating their future expectations or needs.
THROUGH:
Monitoring annual targets for quality improvements in all areas.
Creating a culture of customer focus striving to become the lowest cost producer through agreed annual cost reduction program.
Value people by understanding and drawing upon their strength i.e. abilities and knowledge and make efforts for their training and development.
The quality policy is given at the next page, which is hung in every department of the organization at central place.
Training Programme
They have also trained their quality inspectors. They have a program to train the quality inspector and classes are also held. But they have no proper academy. Different organizations send their employees, which trained them.
ISO 9000
Why ISO is Required FOR PEL
Quality management system given by ISO 9000 acts as a support to achieve customer satisfaction benefits of ISO 9000.
PEL competing against foreign competitor in the local market.
Raise company image.
A step toward total quality management.
Perceived commitment to quality.
PEL need it because we promote the slogan “ The quality conscious company”.
More united workforce through total employee participation.
ISO Certified Product
The certified product of PEL is Energy Meter. The productions of meters are started on August 1994. In January 1997 it got the ISO 9002 certificates. After the certification the complaint level of every meter dropped to less than 0.07%.
On the job training competency certificate is issued. The team assesses weather they learn anything or not.
The backbone of this system corrective and prevention action.
All the workers are trained here for skilled jobs.
There are six section in the energy meters different supervisors are divided according to the section.
CONCLUSION & SUGGESTIONS
CONCLUSION
If we conclude this report of operations management, we come to know the following relevant points which needs the attention of the management of the company while performing the functions of the operations.
NO PROPER INVENTORY
The organization does not have proper inventory planning by the management due to which heavy amount of the money is being put by the company in the inventory.
PEL has the strength also that it has a good repute for the company as being the quality conscious company. It has own experts for the purpose of the control of the quality of products. Due to the good sight selection for the purpose of the power division the company has more access to the whole of the markets of the country. The company also has well established system of the distribution of the company although it is not the integrated one but it is working smoothly.
JUDGMENTAL METHODS
The management of this company does not use the sophisticated technique while making or performing the function of the demand forecasting by the company. They rely more on the judgmental methods for the purpose of the projection by the company about their sales.
SUGGESTIONS
The following are the suggestions being provided by me after visiting of the company.
PROPER INVENTORY LEVEL.
The company should also make some of the methods for the purpose of the keeping the inventory at the optimal level. Proper planning of the material can decrease the amount of the investment in the inventories by the company.
USE SOPHISTICATED TECHNIQUES OF FORECASTING.
The company is an excellent company and it has good image in the mind of the consumers. But they are not applying the statistical tools for the purpose of the forecast of sales which eventually results into having the excessive amounts of inventory by the company. Causal and the time series methods are the good estimate provider about the forecasting and if the management adopted these forecasting techniques no doubt they will be benefiting the company a lot.
