Syed Jaffar AbbasSubmitted by:Firrukh

Idrees

Kawaja flat

• Introduction• Curent opération• Forecasting• Recommendation

introduction• The Khawaja Group came into being

with the creation of their first company named Khawaja Glass in 1969 at Hassan Abdal, District Attock, Punjab Pakistan. Over the years, a single glass furnace facility has grown presently into a proud glass manufacturing complex. They had enjoyed an exclusive market niche in tinted, thin transparent and patterned glass sheets in the country.

introduction• Area Acquired:• 1000 kanals• Total Factory Area: 400 kanals• No. of Employees:• 300 (Executives and Labor)• Setup Cost:• 400 million dollars (approx.)• Direct Competitors:• Ghani Glass Industries• Gunj Glass Industries• Competitive Advantage:• Only license holder for the “Float Glass Technology” in Pakistan

current operation:

• ISO Certifications:The management at KFG does not believe in ISO Certifications. They claim that it is only required for export in certain countries. However, export in those countries is not economically beneficial, so they do not require ISO Certifications. Other than this, these certifications are merely a check list, which become a burden for the company in the contingent working environments of Pakistan.

TQM

• KFG strongly believes in TQM. However, in practice, they say that it is very expensive and fierce competition in Pakistan does not allow them to make necessary allocations for implementing TQM.

• KFG has established a Special Purpose Team, comprising of representatives from every department. The objective of this team is to check the quality at all stages, maintain it within the resources of the organization and suggest improvements in the production process.

Six Sigma Approach

• The production process at KFG is a continuous and line process. Within the current resources of the company, it is extremely difficult to implement this approach. The company does not even possess the necessary equipment to gauge the quality of glass.

Inventory

• Raw Material Inventory• There is no model for the raw material inventory. KFG

has sufficient space for storage of raw material. Most of the raw material is stored in the open. So, they don’t have to bear storage costs. Also, the handling of the raw material is outsourced. The production process is continuous and they will have to incur handling costs at every rate.

• The lead time for the raw material varies from 3 – 7 days. The cost of not having sufficient raw material is far greater than holding excess of it in the inventory. Therefore, they try to hold ample amounts of raw materials in their inventory.

current operation• Work-in-Process Inventory• The production process is continuous and line process. There is no WIP inventory.• MRO Inventory• The production facility is strategically located with easy access to MRO vendors.

The MRO inventory is held in store department. The supplies required on daily bases are held in excess. However, the store department makes daily purchases from Rawalpindi as per requirement.

• Finished Goods Inventory• KFG tries to produce at maximum efficiency. Peak season of glass demand is

summer. The excess production in winter season is held in stock to meet the excess demand of summer. Sometimes, the excess production is stored at strategically placed dealer warehouses, from where they can be dispatched in peak seasons.

• Cost to hold Inventory• KFG believes that they don’t have to consider the cost of holding the inventory

because this cost can easily be met with the price rise in peak seasons.

Forecasting

• Khawaja Flat Glass has a monthly production plan. This plan is made by sales department and given to the operations department. All manufacturing depends on production plan. If demand is high, they will increase the production pull. However, in order to achieve economies of scale, KFG tries to produce at maximum efficiency.

Forecasting

• In this respect, there is no particular forecasting approach adopted by the company. Unfortunately, the monthly sales data was not made available to us. However, KFG informed us that they use forecasting techniques to identify new opportunities. This process is mostly outsourced and demand estimates are made annually. The model for this approach is also considered as a trade secret because it helped them to obtain an exclusive license for float glass technology.

Recommendations

• They do not have R&D department. They should start a R&D department to keep check on the quality and also to develop new products according to the needs of the local market. Such products will have potential for export in countries with similar needs like Pakistan.

• They should start forward integration. Sheet glass can lead to the manufacturing of a variety of other products that have not yet been introduced in the Pakistani market.

• Quality should be improved scientifically. High quality can lead to low failure and appraisal costs.

• As they are the oldest and largest sheet glass manufacturer in Pakistan, they should lead the glass market to create demands for new glass products.

• They do not use abc analysis.