NUST BUSINESS SCHOOL

FINAL YEAR PROJECT

CONSULTANCY SERVICES FOR

S.R HERO PVC PIPE FACTORY

SUPERVISED BY:
DR. MOHSIN SADAQAT

GEC MEMBERS:
DR. FAREESA MALIK
DR. NABEEL SAFDAR

SUBMITTED BY:
IRAM KHAN
JEHANZEB SULTAN
MAHAM NADEEM KHAN
SAIM RASHEED

Date: APR 11, 2019 MBA-2K17 (B)

 TABLE OF CONTENT
EXECUTIVE SUMMARY ___________________________________________________________ 3
Introduction ________________________________________________________________________ 4
Problem Statement ________________________________________________________________ 4
1. Data Capturing and Management ______________________________________________ 4
2. Integrated Process Optimization _______________________________________________ 4
3. Physical Process Execution of Humans and Machines _____________________________ 5
4. Days Sales Outstanding ______________________________________________________ 5
5. Company Registration & Documentation _______________________________________ 5
Proposed Methodology _______________________________________________________________ 5
Business Diagnosis ________________________________________________________________ 5
1. Mapping As-Is Processes _____________________________________________________ 5
2. Gap Analysis _______________________________________________________________ 6
Plan _____________________________________________________________________________ 6
1. Deliverables ________________________________________________________________ 6
2. Design To-be Processes (Proposed Solution) _____________________________________ 7
3. Structure the Works _________________________________________________________ 7
Implement and Review _____________________________________________________________ 7
1. Financial or Economic Objectives ______________________________________________ 7
POST IMPLEMENTATION ANALYSIS _______________________________________________ 8
GANTT CHART ____________________________________________________________________ 9
APPENDIX _______________________________________________________________________ 10
Appendix 1 ______________________________________________________________________ 10
Appendix 2 ______________________________________________________________________ 11
REFERENCES ____________________________________________________________________ 15

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 EXECUTIVE SUMMARY
The main objective of our Final Year Project is to identify the gaps and reasons behind the
problems at hand for SR Hero PVT LTD. through internal and external analysis. These analyses
will further help us design and develop new processes and standard operating procedures for the
company. We will then address these problems with proposed strategies & solutions and then
review and check the performance of those solutions through Key Performance Indicators. In order
to make sure the sustainability of these strategies & solutions, we have developed post
implementation strategies as well.

Various elements of the project are summarized as follows;

1. To prepare the company registration documentation and fulfill the registration pre-
requisites of company registration

2. To identify the gaps in current financial structure and to plan & implement financial
reporting system in line with industry best practices

3. To identify the gaps in current inventory management practices and to plan &
implement inventory management system in line with industry best practices

4. To develop Key Performance Indicators to measure the company performance

5. To perform post implementation analysis by comparing present and old practices of the
company

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 Introduction
Company Introduction
SR Hero PVC Pipe Factory is situated in Multan. It is a partnership firm established in 2012 by
Mr. Sadaqat Ali and Mr. Rasheed Ahmed Awan. They started manufacturing PVC pipes and
selling in the local markets of Multan. During that period the overall economic conditions were
not healthy and there were energy shortfalls as well, therefore, the firm faced hard time to establish
its foothold in the market. At that time, 90% of customers purchased pipes on accrual payments.
As the time passed, they grow and sustained their business by maintaining close relationships with
local market merchants of Multan. They also targeted different landlords in different regions of
Pakistan, mainly south Punjab, a cash-based customer. Further details of the company and product
portfolio are given in the appendix 1.

Problem Statement
1. Data Capturing and Management
One of the baseline problems the company is facing is due to the methods of data
capturing and management. At present, available data is being handled manually (paper-based
data handling) and that data is not being updated regularly (master data on supplier request and
lead time that is entered once, sometimes even only dummy numbers, and then remains
unchanged for years). Company’s accounts are limited to cash inflows and outflows which is
why they are unable to generate any kind of reports for financial analysis, thereby leads to
many economical and operational inefficiencies that is causing delays in decision making.
Details of company’s record keeping practices are mentioned in appendix 2.

2. Integrated Process Optimization

Industry is moving towards the integrated planning process, but SR Hero is still doing
it without formally documenting it. Planning is still limited to the knowledge of the owner or
the person currently in charge for production and the whole processes are dependent on the
memory, experience and production completion guesses of the owners, therefore, the customer
service is poor and lead times suffer. In addition to internal processes, SR Hero through
formalizing its production planning can also utilize the relationships with its suppliers in the
best way.

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 3. Physical Process Execution of Humans and Machines
As mentioned earlier, absence of any system leads to processes execution based on gut
feeling. That is why, the management of operations is not being enhanced at its full potential.
This underutilization of capacity leads to many lost opportunities and excess fixed operational
costs.

4. Days Sales Outstanding

Company does not have any payments recovery system in place that is why they have
huge amounts of payments outstanding in the market all the time. Year’s old payments are still
outstanding because there is no check and balance or the reminder system for collection of
those payments.

5. Company Registration & Documentation

Company is in business since 2012, but it has not been registered yet. That’s why they
are facing many problems pertaining to attracting more investment and other administrative
matters.

Proposed Methodology
We have divided the methodology into five steps. We have done the first step of Problem
Recognition (some of the problems have been mentioned by the company representatives and
others have been identified). Remaining four phases are being discussed below.

Business Diagnosis
The first step is to perform a complete diagnosis of the company and its operations. In this way we
will be able to understand the current practices being followed in the company. Based on which
we can identify the root cause to problems at hand. For this diagnosis, we’ve planned a twofold
approach (given below).

1. Mapping As-Is Processes

We will analyze and map the current processes of the company through following steps.
This analysis is thoroughly based on internal analysis of the company.

Personal Visits and Observations:

In order to be fully aware of the system and how the processes work at SR Hero PVC, we will
be visiting the organization multiple times. To gain more in depth understanding, we will stay

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 at the organization and will spend time from day start till the day off and observe the routine
activities being held there. In this way, we might be able to identify the issues being faced by
the company.

Qualitative Research (Interviews):

Apart from our personal observations, we will conduct interviews with the owners and workers
at the company. This will give us insights and make us able to understand the reasons behind
problems and the processes themselves.

2. Gap Analysis
By thoroughly identifying and analyzing internal processes, we will try to study the industry
practices to identify further gaps.

Identify the area of change

Identify and study the gaps

Identify the solutions to bridge those gaps.

That could be done by performing following steps.

Market Research

To be fully aware of the industry practices and develop do’s and don’ts for SR Hero,
we will visit other PVC pipe factories in Multan and search available literature. Based
on our market research, we will be able to set benchmark standards for our project.

Competitor Analysis

SR Hero has numerous competitors present in the market. We’ll be studying and try to
find their practices in order to build competitive advantage or decide what standards
we must follow.

Plan
The next step is planning the project implementation based on our observations and
analysis. Identify the works required to be realized in the project. Below are the activities we have
planned.

1. Deliverables
These deliverables are based on what are the requirements and issues at hand.

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 i. Documentation and Registration of the company

ii. Financial reporting system

iii. Inventory Management System

iv. Key Performance Indicators

2. Design To-be Processes (Proposed Solution)

Based on data collected, we will design To-Be processes to solve the problems
identified. In this step, we will develop standard processes and recommend the software that
company can use for digitalization of their data.

3. Structure the Works

Based on our identification of what needs to be done, we will structure and prioritize
the activities.

Documentation and Registration of the company have been identified to be one of the
most important tasks, we have currently suggested some recommendations to SR Hero for the
registration of the company.

Implement and Review

We have planned a phased implementation strategy for the company. In which we will be
personally monitor and observe the outcomes after each phase.

1st phase: Documentation and Registration

2nd phase: Digitalization of the data and financial reporting

3rd phase: Training of the employees for adaptability of new processes

4th phase: Measure and review the on-going performance

Implementation is defined as per the set objectives of the project. For our project we are only
concerned with the financial objectives.

1. Financial or Economic Objectives

SR Hero is mainly concerned with the financial objectives that are related to cost saving and
revenue enhancement. We will implement the aforementioned plans and to measure the progress
and effect of those plans we will implement some KPI (key performance indicators).

How we will review the performance for these objectives?

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Measurement of performance of the company on an ongoing basis.

Monthly Sales Growth and Targets: Percentage of previous sales vs sales after the
implementation of a new system.

Order processing time: Time taken to process or manufacture the order till it was shipped and its
comparison to previous order processing time.

Production lead time: Production lead time tells us about the responsiveness of company to
satisfy customers demand. Above average lead times give competitors an edge not only in
satisfying customers but also in changing and improving product specifications. It also indicates
inefficiencies in the production process.

Percentage of stock out inventory: When a customer places the order, but the company doesn’t
have inventory to satisfy customer order it is called stock out.

Inventory service level: In most of the cases when we are dealing with inventory problems, lead
time is taken as a measure. But it is often difficult to predict the value of stock out cost when taking
lead-time variable. For this purpose, we use service level parameter.

Days of sales outstanding: Days sales outstanding is to guess the size of their outstanding
accounts receivable. It measures this size not in units of currency, but in average sales days.

Inventory Turnover: Inventory turnover is a ratio showing how many times a company has sold
and replaced inventory during a given period.

POST IMPLEMENTATION ANALYSIS

After the implementation, we will check out the progress every month on the following basis.

Cost Reductions: How much cost have been reduced as a result of the changes we’ve made. We
have targeted the reduction by 15 to 20%.

Other challenges addressed and improvements: We will also analyze whether the challenges
previous being faced by the company have been addressed successfully or not. What are the effects
of new implementations? Has it made any improvements or even worsen the company’s progress?

Comparison of old vs new processes and their efficiency: At the end of our project we will
compare the old and new processes and their efficiencies in order to check the effect of our work
and suggestions for the company.

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 GANTT CHART
9/7/2018
10/27/2018
12/16/2018
2/4/2019
3/26/2019
5/15/2019
7/4/2019
8/23/2019
10/12/2019
Orientation

Finalizing company and supervisors

2nd meeting with the company

Group discussion and division of tasks

Finalize Proposal Draft and Presentation

Submission of proposal draft

Submission of Form-2A (duly filled & Signed) to MBA…

Group discussion and division of tasks

Finalize Report

Company visit for data collection

Fully automate the financials

Report Finalization

Submission of Final Project Report and Presentation…

Submission of 3 Hard Bound Copies with Acceptance…

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 APPENDIX
Appendix 1
Detail of Stock Keeping Units

3’’ 4’’ 5’’ 6’’ Single Medium Double

layer layer layer
Terbella
Daewoo
Hero
Singer
Total Stock keeping Units: 21

Raw Materials for PVC Pipes

1. PVC Resin

2. Calcium

3. PVC Stabilizer Turkey

4. Steric Acid

5. Titanium

6. Neel

7. DOP (Diesel)

8. UV Tax

Manufacturing Process

1. Mixer

1.1 Wastage Crasher

2. Pallets Machine

3. Pipe manufacturing Machine

3.3 Auto Air Pressure

4. Water Cooling System

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5. Auto Cutter

6. Socket Machine

7. Bundling

8. Stock Keeping

Appendix 2
Gate Pass

For every material going out of factory a Gate Pass is generated. It consists of three copies. One
for office use and two for the customers. One of the customers’ copies is returned to the customer
with a customer’s signature on it when he received the goods. Every gate pass has a serial number
against which bill is generated in Bill Books.

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Bill Book

For each Gate Pass product, bill is generated that consist of price of a product as per decided
with the customer. Then the bill is sent to customer on every Thursday for recovery of
payments. Bill Book has a serial number which is then used to make an entry in Major Account
Book.

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Major account Book

Each bill generated in Bill Book is then entered in the Major Account Book and each account book
has a serial number which is used to record transaction in respective Customer Account Book.

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Daily record book

Daily expenses and payments received of any good are recorded in Daily Record Book which is
then recorded on the Major Account Book.

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 REFERENCES
Alicke, K., Rachor, J. & Seyfert , A., 2016. Supply Chain 4.0 – the next-generation digital supply chain.
McKinsey&Company, October.

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