Operations Management

Presented to : Dr Rizwan Ahmed

Zain Aftab
Mustafa Sethi
Hamza Mudassar
Muhammad Arsalan
Mohammad Saif Aly Gul

Table of Contents
Executive summary...........................................................3
Company Introduction.......................................................4
Objective of the project...........................................................5

Products........................................................................... 5
Toilet soap:........................................................................................... 5
House Hold Products:...........................................................................5
Liquid Glucose:..................................................................................... 6
Major Products.......................................................................6
OIL BASED SOAP NOODLES..................................................................6
SOAPS WITH RANGE OF NATURAL EXTRACTS.......................................6
BP & USP GRADE PURE GLYCERIN.........................................................6
CLARIFIED RICE SYRUP.........................................................................6
CONVENTIONAL & ORGANIC RICE PROTEIN..........................................7
Main Customers......................................................................7

Analysis of Operations.......................................................8
Process flow chart..................................................................9
Facility Layout......................................................................10

Operational inefficiencies................................................11
Batch production of specialized products...............................11
Translucent soap...................................................................11
Generator power supply........................................................12

Conclusion......................................................................12

Executive summary

This report covers an extensive research into the operations of Khatoon Industries Pvt Ltd.
Khatoon industries is a business to business oriented company, with its production facility
situated in Gujranwala, Punjab, Lahore. The industry is a leading manufacturer of various
products, such as Soaps, household detergents, personal hygiene products and shampoos. The
report examines the various processes of the company and studies the facility layout of
Khatoon. The paper also identifies some of the prospective issues that may arise, and also
recommends steps that Khatoon could take to remove any weaknesses that exist in its
operations. The prospective issues include: batch production of specialized products,
translucent soap production, and finally, back up energy costs.

Company Introduction

Khatoon Industries (Pvt.) Limited was established in 1980 as a laundry soap manufacturing
company. Over the years, the company widened its horizons and today it is producing the
finest brands of Toilet, Medicated, Laundry Soaps, Glycerine, Hair Shampoo, Face Wash,
Lotions, Creams & Liquid Detergents.The company has installed one of the most advanced
soap machinery including glycerine extraction plant and has the ability to produce soaps of all
sizes with variety of packaging combination.
The company installed HFCS-55% in 1986 with the technical help of Samsung Group
(Korean, Samsung group) and produced high Fructose corn syrup till 1992 now liquid glucose
is being produced at this plant. Company produces rice syrups and rice proteins for national &
International market. We are committed to produce and deliver the product without
compromising on quality standards and working hard for continuous improvement.
Khatoon Industries started its business in 1982 by manufacturing of soap on a small scale
with a small team of highly professional and dedicated personnel. Continuously and gradually
this small unit started manufacturing of Toilet Soap on a large scale in 1984.Today KIPL is a
diversified industry dealing in Toilet, Medicated Soaps, face washes, hand washes, liquid
glucose,rice protein, liquid bleach, shampoos. KIPL has not only introduced modern
technologies in Pakistan but has also promoted corporate governance in harmony with the
country's cultural environment, thus providing a sense of participation at every level - from
the grass roots to the top. To cope-up with the growing needs of the industry, permanent
departments have been established for development and to introduce the state of the art IT
facilities in the country.
Realizing its social responsibilities as a corporate citizen, the Industry has been playing a role
in promoting the life style and contributing to health facilities. It is playing its role in
improving the quality of life with the commitment that what has come from the society should
be shared with the society. KIPL has been established in order to focus on community's
growth particularly through health care, skin care and body care.
The growth of Khatoon Industries is the result of its focus on good Corporate Governance.
Now, as a market leader in the contract manufacturing of soaps and cosmetics, it is emerging
as a globally competitive center of production and exports.

Objective of the project

We chose a soap manufacturing company named Khatoon Industries Pvt Ltd. We studied their
product line. We looked at their operations. Then we analyzed their core competences. We had
a look at their facility layout.

Products
Khatoon Industries (Pvt.) Ltd is an organization of excellence in the manufacturing of
personal
care products, household products and Liquid Glucose-Rice Proteen. They pride themselves
on providing high quality products because these are being manufactured under extensive
quality control checks coupled with over 30 years of manufacturing experience, which have
provided them with a unique understanding of soap chemistry and the mechanics of soap
production. They are able to entertain custom formulations or customer may choose any
formulation from our "formulation library" which is established after multiple years of our
R&D activities.
Following list shows our broad range of products:

Toilet soap:

Beauty Soap
Medicated Soap
Specialized Soaps
Anti-bacterial Soap

House Hold Products:

Hair Shampoo
Hair Conditioner
Hand Cleanser / Sanitizer
Dish Wash
Laundry Softener
Toilet Bowl Cleaner
Facial Cleansing Foam/Cream/ Gel
Cleansing Milk / Gel / Oil
Liquid Bleach
Liquid Blue
Vinegar

Liquid Glucose:

Clarified Rice Syrup (28-95 DE)

Brown Rice syrups (28-95DE)
Rice Protein 60%

Major Products
OIL BASED SOAP NOODLES
They offer their customers high quality soap noodles based on different blends of vegetable
oils. Reduced lead-time, competitive price & rigorous quality controls are some of the
distinguishing features of their soap noodles.

SOAPS WITH RANGE OF NATURAL EXTRACTS

In order to meet specific requirements of our valued customers, we can offer ready-to-use
soap recipes, which are developed after continuous research of more than 3 decades. High
speed soap manufacturing lines coupled with different packaging solutions make us a
mutually beneficial strategic partner in real sense.

BP & USP GRADE PURE GLYCERIN

Glycerin is a simple polyol (sugar alcohol) compound. It is a colorless, odorless, viscous
liquid that is widely used in pharmaceutical formulations. Glycerin has three hydroxyl groups
that are responsible for its solubility in water and its hygroscopic nature. Glycerin is used in
medical and pharmaceutical and personal care preparations, mainly as a means of improving
smoothness, providing lubrication and as a humectant. Glycerin is classified by the U.S. FDA
among the sugar alcohols, as a caloric macronutrient.

CLARIFIED RICE SYRUP

It is colorless or almost colorless sparkling clear syrup, odorless and sweet taste. It is made
from the enzymatic treatment of brown rice with natural enzyme preparations, which then
undergoes filtration and concentration to a rich, heavy syrup. This natural sweetener has no
genetically modified materials used in its production. The product is available in 26 to 95DE.

CONVENTIONAL & ORGANIC RICE PROTEIN

Organic & conventional Rice protein concentrate is a source of protein with excellent
digestibility. They have feed grade & food grade protein with different particle sizes. It is

health enhancing protein source & Excellent source of protein for humans especially for
athletes. Organic & conventional rice protein is free from all food allergens & easy to digest.
It is Free from additives & chemicals & Hypo allergenic. It is 100% suitable for vegetarians
and is also available in 50 to 65% protein.

Main Customers
Golden Pearl, Reckitt benckiser limited (Dettol), Treat corporation (Body guard) are one of
their major customers. Total customers of Khatoon Industries are 34 different companies but
they only told us these three as they said this is confidential information.

Analysis of Operations
Khatoon Industries Private limited basically specializes in contract manufacturing household
products. Khatoon Industries offers their customers the most affordable and highly reliable
service. This, in fact, is primarily the companys core competency, the ability to provide its
customers with state of the art services using novel technologies and automated machinery

and in an efficient manner. As far as the companys operational strategy is concerned, their
main aim is to provide quality products at the most affordable prices, basically in order to
become cost leaders in the market. They focus on mass production and also use latest and
most advance technology to produce their products. This enables them to produce at a very
low cost as compared to their competitors. The company also focuses on flexibility, which
mean that they can cater to unexpected high demand. Speed is also another plus point for this
company as they can deliver products quickly and on time. These are the basic functions that
Khatoon Industrys operations revolve around.
To ensure the best possible quality of its product a R&D team works round the clock to come
up with better products and better ways to produce the products. Raw materials are only
purchased from certified and approved vendors, and are also inspected on regular basis. Also
their manufacturing operations are inspected regularly. To ensure top quality, final products
are again checked and inspected.
To ensure least manufacturing costs, company continues to improve its technology and ways
of producing its products. The company believes in division of labor and specialization. It
hires workers that are highly skilled in their respective fields. Having a mass production
approach, the company is able to achieve economies of scale.
Khatoon Industries Pvt Ltd is basically contract-based manufacturer. Products are
manufactured as per order. However, as for rice-based products, this company has limited
capacity against the market. They follow a made to stock approach but the product is usually
sold right after production, therefore it is not stocked for long.
The company almost entirely uses mass production, however there are certain customers for
which they follow batch production, as they require slightly more specialized products.
Khatoon has, for instance, three assembly lines for soaps and one each for face wash and
shampoos, and so on. Khatoon focuses primarily on mass production of soaps, however, as
mentioned above, the company also deals in batch production of different jobs, such as
shampoos and face washes etc.

Process flow chart

The below figure indicates the process flow chart that the industry follows, it basically
outlines the functional areas and the flow of operations that takes place in the facility.

Facility Layout

The production facility for Khatoon Pvt Ltd is a heavy industry, its spread out over 9 acres of
land, and houses different plants that cater to different product lines.
Khatoon Private ltd uses product layout for its operations. It enters the input materials at one
end, and the finished product comes out at the other end of the assembly line after going
through 5-6 machineries. The input first goes through the plodder machine, which roughly
mixes the contents of the raw materials. Next stop is the mixer, which thoroughly mixes the
constituents. After the entire contents have been properly mixed and the concentration has
reached consistency, it then goes through the soap rotary and cutting machine, which basically
shapes the bars of soap. Next station in the assembly line is the stamper. The stamper imprints
each respective soap bar with the product logo. After this, the next step is that, the product
goes through the packaging machine and is wrapped into its separate wrappers. And thus
finally, the finished product is cartooned via the cartooning machine, and the entire process is
overseen by employees, so as to maintain quality assurances.
The facility also houses multiple storage warehouses, and Khatoon holds diferent categories
of its inventory in different warehouses. For instance, there are different warehouses
dedicated to raw materials, and different for finished goods, and similar is the case for MROs.
The flow time for the finished product is linked with the production run: larger the production
run, greater the cycle time to complete the order. Furthermore, it depends upon the available
capacity at that time and urgency of customer.
It is hard to determine the exact time it takes to produce one finished product as the automated
machinery carries out production of numerous products simultaneously. And since Khatoon
deals in numerous products, the time basically varies from product to product. Some products
need just few hours but some may require a number of days. For instance, the rice-based
products that Khatoon produces takes approximately 12 hours to produce.
Although, the current facility is located in Gujranwala, however, majority of Khatoons
customers are in the Sindh province. Thus, the transportation of the product accounts for
substantial amounts of cost. With the exception of Treat, almost all of Khatoons customers
are in the southern region of Pakistan. It is for this particular reason that it is recommended
that the company relocates its facility to a location with a more suitable center of gravity. The
center of gravity

Operational inefficiencies
Since Khatoon Industries competitive priority is low cost leadership, the company strives to
maintain its operations to keep down the costs. Therefore, any operational deficiency in the
process is hazardous to Khatoon.
The problematic issues that may arise, and may hinder Khatoon are identified as:

Accidental shortage/wastage of materials

Accidental break down of mechanical parts
Energy crises

To insure that these issues do not prove to be too costly to the company, Khatoon is taking the
following measures:

Safety stock of materials

Stock of spare parts
Alternate sources of energy (like generator)
Shifting of labor from one plant to another

The major inefficiencies in the operations that we predict may pose a problem to Khatoon
industries are:

Batch production of specialized products

Translucent soap production
Generator costs

Batch production of specialized products

The plant remains closed prior to production of specialized products, as the machinery etc
needs to be cleaned thoroughly to remove any traces of the previous production. The cleaning
usually takes quite a few hours, therefore, accounts for the increasing opportunity cost for the
company.
Khatoon should perhaps take steps to install a separate plant for these specialized productions
in order to cut these time losses.

Translucent soap
The production of translucent soap has further proved to be a costly matter for Khatoon
Industries. As the material used for this form of soap is very sticky in its gel-like form, it
usually sticks to the machinery and disrupts the assembly line.
Khatoon is looking into the possibility of purchasing a new stick-proof equipment that will
eliminate this threat once and for all. However, in the meanwhile, Khatoon could start
layering their machinery with non-stick plastic that could be replaced after every cycle.

Generator power supply

Khatoon industry prides itself based on low cost leadership, and the current power issue is
taking its toll on the companys cost plan. The use of generators shoots the costs for the
company sky high.
Khatoon should start exploring the possibility of alternate energy sources that would be more
viable for them keeping in mind the cost constraints. Solar energy is the most recommended
alternative. And the company might even choose not to install such heavy solar panels, as it
could afford to run even on 50% capacity during when the power is out. This would perhaps
slow down production, but would indeed save up costs.

Conclusion
Keeping in mind the recommendations made, Khatoon industries could further improve its
operations, and thus, strength its competitive priority of low cost cost leadership.