An over view on Supply chain practices at YUNUS TEXTILE MILLS

PREPARED BY

: M. HAMZA ANWAR : KASHIF ALI ABRO : AMEER ANAS SOLANGI

(6190) (6239) (6284)

: SYED HAMMAD HASHMI (6238) : MUHAMMAD ASHRAF (6105)

SUBMITTED TO DATED

: Sir Anas Iftikhar : DECEMBER 18th, 2012

Certificate of Approval

This is to certify that Mr. M. Hamza Anwar, Mr. Ameer Anas Solangi Mr. Syed Hammad Hashmi, Mr. Muhammad Ashraf and Mr. Kashif Ali Abro have satisfactorily completed the requirement to prepare this Long Report on An overview on supply chain practices on YUNUS TEXTILE MILLS under my supervision as part of their Supply Chain Management Course.

_____________________ Sir Anas Iftikhar Course Instructor

Letter of Transmittal

To:

Sir Anas Iftikhar

From:

Mr. Kashif Ali Abro, Mr. M. Hamza Anwar, Mr. Muhammad Ashraf, Mr. Syed Hammad Hashmi and Mr. Ameer Anas Solangi

Subject: Dated:

An overview on supply chain practices on YUNUS TEXTILE MILLS

December 18th, 2012

As you directed for the report, here are our findings about the practices of supply chain in YUNUS TEXTILE MILLS. If there may be any query / information you required, you can contact Mr. Muhammad Hamza Anwar at +92-334-3150701

TABLE OF CONTENTS
S no. History Range of Products Customers Categories of Customers Suppliers Manufacturing Spinning Weaving Lab testing Processing Suppliers Stitching Packaging Quality Assurance CONTENT Pg No. 6 8 9 9 12 15

Logistics Outsourcing - Carriers Production Planning Inventory Management Conclusion

19 21 21 22 24

ACKNOWLEDGEMENT
First of all, we are thankful to ALMIGHTY ALLAH for blessing us every potential to accomplish this report. Thy helped us all whenever we got stuck at some point or messed up. Secondly the group feels proud to present this report to Sir Anas Iftikhar. The group praises Sir Anas for tailoring the course content in a manner that we could act decisive while choosing our majors. The leader along with mates would like to thank administration of IUGC from providing us with the visit letter at the right time; especially Madam Hina Hamid. The team would also like to thank all the class colleagues and professional for their infinite support making for us every possibility to get the best possible output. Team, cordially obliges the never ending support of Mr. Muhammad Mohsin Fareed (senior business analyst) for his extensive support in report making saga. Last but never the least; our families for their endless efforts in our studies coping up with matter related to us on hectic times.

EXECUTIVE SUMMARY
Yunus Textile Mills is the largest textile exporters of Pakistan. YTM was established in 1962 by Mr. Haji Aziz Tabba who has passed away on May 19, 2005. Initially they started with 30 picanol looms in weaving but with proper expansion plans and modernization, they now have more than 2000 conventional looms, 2 weaving mills with 700 sulzers, 2 spinning mills with 225000 spindles and a modern processing facility with lab testing. The range of products that Yunus Textile mills have are room curtains, bed linen, table linen, kitchen curtains and sofa covers etc. The key customers of YTM are IKEA, Wal-mart, JC Penney, Laura Ashley and Tommy Hilfiger and so forth. YTM maintains a high profile customer loyalty with the customer and always willing to provide their customers with unmatched quality standards. YTM follows very restricted sourcing as they are vertically integrated. The main supplies for YTM are Cotton, Yarn and Chemicals. The key suppliers for YTM are Commodity Market for cotton; and Engro Chemicals and ICI for the purchase of chemicals. They maintain a standardized manufacturing process which is comprised on 5 main subprocesses, Spinning, Weaving, Processing and Lab testing, Stitching and Quality Assurance. Earlier they used to purchase yarn from local suppliers as they did not have a spinning facility but now they have 2 spinning mills out of which one is acquired by them recently in Nooriyabad. Earlier their logistics process was fully outsourced but now they have an in-house fleet for logistics processes. These in-house logistics fleets are inducted recently in their facility for movement of materials within the facility and its expansion is also a major part in the YTMs expansion plans. Furthermore, YTM believes losing a customer order is losing a customer indeed.

INTRODUCTION
The company was founded by late chairman Haji A. Aziz Tabba in 1962 that passed away on 19 th May, 2005. Initially it started as a small commercial exporter of cotton yarn to far-east countries. With rapid development in business, the export activities expanded significantly to African countries and in particular to Sudan during 1970 onwards. The continuous growth and development in the business led the group into industrial activities in 1983.

Initially a small weaving factory of 30 picanol looms was set-up during 1983. Over the years the industrial expansion and modernization was dome rapidly in the field of textile. By the grace of god, today the group has 2000 conventional looms to produce industrial fabrics, 2 weaving mills consisting of 700 sulzer loom with complete new modern back process, 2 spinning mills of 22, 5000 spindles also with most modern back process and modern processing facilities. The automated spinning & weaving has helped in producing A grade yarn, best quality fabric and other textile made-up items. Yunus feel proud that the name of Yunus Brothers has got world-wide reputation through its timely fulfillment of commitments and supplying quality goods, making their product and more and more popular in the global market. From 1973, the group has been awarded President Trophy and Best Export Performance every year by Federation of Pakistan Chamber of Commerce and Industry and Export Promotion Bureau. Yunus Textile Mills has the distinction of being the newest and most modern textile mill in Pakistan. With vertically integrated set up from weaving to make up home textiles and garments, initially the plant was designed to produce 4 million meters/annum of dyed and printed fabric. This capacity has been enhanced to 80 million/annum. This expansion, within a short of span of 12 months, is a testimony of Yunuss costumer services reliability and superior quality.

Equipped with state-of-art machinery high quality printing and dyeing of various fabrics for value added home textile industry. Yunus Textile is servicing a broad selection of customers ranging from leading textile manufacturing to major converters and brand of home textiles. Yunus Textile is OEKO-TEX 100 certified and has taken the lead in preserving our fragile eco-system by investing in water treatment facility, water recycling, conservation and clean power generation. Believing in the fact there is no substitute for quality; Yunus Textile Mills has been vigorously trying to put in all its efforts to elevate the quality of its products at every stage of the entire process.

RANGE OF PRODUCTS
There is a wide range of products offered by YTM. Following is the list of products that they manufacture. Sheet Sets Full of Dream Full of Comfort Curtains Amazing in Texture Decorative in look Quilt Cover Sets Top in Quality Superb in Comfort Bed in Bag The complete sleeping pleasure Table Covers Beautiful in Design Useful in Usage Kitchen Curtains Amazing in Texture Decorative in look Children Bed Sets Top in Quality Superb in Comfort Almost everything that comes under the range of home textiles is manufactured by Yunus Textile Mills.

COSTUMERS
Costumers are the root of working for any runningbusiness organization. YTM is of no exception. They totally depend upon their customers. Without predicting the demand of the customers their business is as good as dead. Understanding the customerss need and fulfilling them is also very vital for YTM as customers are the priority for them. Following is the list of costumers; YTM has served and looking forward to do better for:

Germany MGB- Metro Kaufhof

USA JC Penney Target Wal-Mart Marmaxx Kohls Sears Linen-n-Things Bed Bath & Beyond

Italy Gabel Campagnolo

Certain brand names that come under the production of YTM are: USA Tommy Hilfiger Calvin Klein United Kingdom Debenhems Francis Price Germany Park Lane Fabiani France La Redoute E lec lerc

Raymond Waites Laura Ashley

Argus Dunelm Stephen Fracis Spain Elcorte Ingles Hipercore Eroski

3 Suisses La Blanche Porte Bequet Conforama Carrefour

Italy Coop

Montgomery ASDA Royal Doulton

CATEGORIES OF COSTUMERS
Yunus have three basic types of customers and these categories have their different demand patterns. YTM also have different working standards with all these three types of customers. Importers Buyers; and Direct Retailers.

Importers
These types of customers are located in the local market of UK, USA, France, Italy, Germany and Spain. They have a certain warehousing service and they buy products from YTM and sell them to direct retailers like Wal-Mart, Target, and JC Penney etc. They have direct contact with the YTM and give those orders according to their demands having no fix buying patterns and no preferences at all. They also maintain certain level of stock with them so there orders delivery dates are sufficiently long and therefore lesser burden on YTM team to have order done in shorter time.

Forecasting (Importers) Demand

YTM forecast their demand according to the past orders. They dont have any fixed demand round the year and they buy from YTM seasonally. Predicting the demand of importers is a very difficult task as there is no such access of YTM in the database system of these importers. So, YTM just wait for their confirmed orders to start any related working.

BUYERS
Second type of customer to YTM is of Buyers category. They are from the niche segment of their target market. These customers have licenses for various brand names. They order to YTM and give prints for the tagging and logo material of their respective brand names like Tommy Hilfiger and Laura Ashley. They also have direct excess to the marketing department of YTM and ask for quotations before giving the final orders. They do also maintain certain level of inventory but not as much as buyers and so their demands have to be fulfilled in quite shorter span of time then of its importers.

Forecasting (Buyers) Demand

The demand for these customers is also predicted in the same fashion as of importers. They are also seasonal buyers and their order patterns are predicted according to the past records. Buyers have also not given any access to YTM in their database systems and therefore demand for these types of customers is way much difficult to be predicted. So best thing to do is to wait for their orders to arise and then react accordingly.

Direct Retailers
Third and the last of the categories of the costumers are Retailers. They have selling points in the target market and sell the product to direct end users. They are the most important customers of YTM and the main business of YTM is done with these types of costumers.

They do not maintain any level of inventory and therefore meeting their demands in the timely fashion is very necessary for YTM. Again they sell the product to the end users so it is very important for YTM to maintain the quality standards as committed. They do access the marketing department of YTM and placed their orders but their orders are more like yearly based programs and once the first shipment of order is made on quarterly basis than whole responsibility is shifted to YTM.

Forecasting (Retailers) Demand

They have yearly based contract with YTM and YTM is obliged to serve them at any time during the year according to their demands. YTM has access to their Retailers database system and they use it to forecast their demands on past selling patterns. They have a business analyst who looks at the records and then predict the buying patterns of the retailers for next quarter. But these forecasting are not always up to the mark and if like we have forecasted for 100,000 units and they come with the demand for 200,000 units. YTM is still bound to meet their demand as its a contractual based work and there is no room what so ever for declining the orders given by retailers.

SUPPLIERS
To produce anything raw materials are needed by every manufacturer and all the raw materials are not always produced in-house. So, a number of raw materials are procured from the commercial market and the manufacturers need supplies for that purpose. Suppliers are the group of people and organizations that provide raw materials that are required:

(1) Quality

(2) Quantity

(3) Price

On the basis of these three elements, company selects their suppliers.

YTM SUPPLIERS
YTM also have a set of suppliers and they have a continuous relationship with round the year. YTMs policy for supplier selection is that they dont have any fixed supplier for their raw materials although they have preferences for some suppliers. YTM have categorized their suppliers according to their raw materials and they have different criteria for each category supplier. Suppliers categorization is in: Yarn Suppliers Fabric Suppliers Suppliers for other Raw Materials

YARN SUPPLIERS Yarn is something that YTM do not anticipate to plan for. When fabric planning is done in the weaving department Yarn is planned by default. YTM has no such fixed supplier for the Yarn although they always give preference to their TWO SISTERS companies for Yarn Procurement.

Gadoon Textile Mills Limited; and Fazal Textile Mills Limited.

If these Yarn suppliers are not available with the required quantity at required time then there is not such an issue for YTM to switch to another Yarn supplier(s). Nishat Textile Mills Amjad Textile Mills Arain Textile Mills

FABRIC SUPPLIERS As their delivery lead time (DLT) is very short (about 6-8 weeks) and for unexpected orders they cannot always start the fabric procurement from niche so they purchase fabric from another commercial manufactures who have available idle capacity. They buy fabric from many suppliers some of them are as follows:

Fazal Textiles Orient Textiles Suraj Textiles GTM Textiles Faisal Textiles Kohinoor Textiles

ISSUES RELATED TO YARN/FABRIC SUPPLIER

YTM also give adequate importance to Supply Chain Management and therefore they want to give access to their suppliers in their database but their suppliers are not willing to take that much amount of risk like YTM does with respect to retailers. Moreover their suppliers are not as much efficient and technologically advanced as YTM is, and therefore they cannot maintain a parallel flow of working with YTM. YTM also do not have certain fixed size and purchase quantities vary according to the market situations and availability of the suppliers.

SUPPLIERS FOR OTHER RAW MATERIALS

Another range of raw materials like needles, dyes, chemicals (chlorine and others) threads and other components regarding complexity of machines.

These Raw Materials have their fixed reordering point and when their inventory is reduced to 25-30% repurchase is made regarding the concerned component.

These Raw Materials are purchased round the year on periodic basis and have almost fixed suppliers for them.

YTM purchases these Raw Materials from local market.

PRODUCTION PROCESS
WEAVING YTM employs 238 Picanol Omni Airjets for weaving wide variety of production ranging from T120 to T-600 in yarn counts of 7/s to 80/s, producing sheeting satins, twills, stretch fabrics blended with lycra and dobby weaving both in 100% cotton and blends for a flawless finished fabrics. The mill is accredited by Dupont. For fabrication of high-count textiles YTM uses US Pima and Egyptian Giza cotton, providing YTM an edge in production of high-end fabrics. PROCESSION LABORATORY We are an OEKO-TEX certified company. Procession laboratory is divided into three sections: Fabric Testing Color Matching R&D Section

Fabric Testing This section has latest fabric testing equipments. All the fabric tests are performed according to AATCC, BS, ASTM & other worldwide standards. Color Matching This section has also got latest equipments like: Data Color SF-650X with Colorite System for Color Production. Verivide Visual Color Assessment Cabinet. Gain Color Dispenser for dispensing the color recipes & other latest equipments R&D Section All the members of this section are highly qualified normally textile graduates. R&D gives the services to all the processing departments. Their work comprises of daily routine work, trouble shooting, queries, lab and bulk trails, and product evaluation in terms of quality, process, and cost and environment safety. This section also engages route designing, selection of dyes and chemicals. DESIGN STUDIO At YTM marketing department; the team comprises of highly trained designers creates inspiring new designs as per the aesthetic preference of various customers. Latest technology of color separation and engraving by Stork including both wax jet and laser engraving enabling YTM to create a wide range of sophisticated designs, using fine mesh screen.

PROCESSING Pre-Treatment All textile fabrics, natural or synthetic require various physical and chemical treatments to convert them into textile finished fabric garments suitable for use by the consumer. The first

stage in this process is to clean the fibers (Pre-Treatment), natural fibers require more cleaning than synthetic fibers as natural fibers such as cotton contain waxes etc, which must be removed prior to any processing hues and subtle shades of pastel sky, to the rich vibrancy of the flame of the forest and deepest blends of the midnight blues. Technically YTM is capable of pigment, reactive and vat dyeing of international standards on YTMs continuous open width dyeing thermo-sol range. Data Color and Greg Macbeth Color Systems support color batch preparation. Shades variances are kept under control using Spectro Photo Meter.

Printing
YTM undergoes a high standard of printing, utilizing both Pigment and Reactive Dyes up to 16 colors. A computerized color kitchen enables YTM to do accurate color matching time after time, support their printing operation. The range of designs produced at YTM caters to a diversified global market.

Finishing
As smooth as silk or as lustrous as satin, YTM provides a variety of finishing. Besides standard finishing, YTM offers its customers water and oil repellent, stain release by Scotch Guard, or Teflon by Dupont. YTM also provide fire redundant as well as antibacterial finished products.

STITCHING
Production of home textiles is a vital activity as YTM. Their efficient and modern stitching department is capable of producing a wide range of home textiles, ranging from bed linen, window treatment, table linen, sofa covers and as assortment of accessories meeting the highest international quality standards. Stitched or Unstitched, YTM fabrics are products that meet customer requirement exceeding all expectations.

Texpa
YTM is the first in Pakistan to introduce home linen in automation for which they have a fully automated stitching plant with the capacity of approximately 5000 sets per day.

QUILTING
In YTMs quilting department they offer a range of exquisite patterns for home textile products. YTMs single needle computerized machines have the capacity to produce 100,000 comforters per month. YTM also have a fully computerized multi-needle quilting machine with a capacity of approximately 900,000 meters per month.

Warding
YTM has the latest warding plant with a capacity of producing 3000 kgs of Polly-fill per day.

EMBROIDERY YTM has 20-head fully automatic machinery that allows an attractive play with colors. The finest embroidery exhibits the essence of their superior quality. Be it a Curtain, Duvet, Pillow or Cushion the excellence of their embroidery has a class of its own.

TOTAL QUALITY MANAGEMENT (TQM) YTM focus on TQM: Total quality management is the root working of YTM. They can never compromise on the quality issues at any cost. The element of risk is very high for YTM, once the order is being placed by the customer. YTM has to ensure its QUALITY not just to first costumer, but till the end consumer.

LOGISTICS:
YTM is a vertically integrated organization and therefore it has a very limited logistics operation. They buy cotton from the open (commodity) market and chemicals from the local suppliers. Even for these chemicals the suppliers and their qualities are specified by the clients.

In-Bound Logistics:
YTMs in-bound logistics is comprised of the local market from which the cotton is bought and any supplier that has the quality and quantity available is chosen for the period. YTM also buys the chemicals from outside suppliers which are mostly client specified and therefore they are responsible for timely delivery, required quantity and quality.

Out-Bound Logistics:
YTM prefers the orders where the customers are required to pick their orders from the YTM premises. For the remaining accepted orders where the YTM is responsible for delivering the orders to the offshore locations the company uses contract carriers who ship the consignments to the customers and therefore the process is outsourced and the contractor is responsible for timely delivery and its quality.

Outsourcing:
YTM believes in entertaining every customer order and therefore it is sometimes difficult to manage all the orders on time and YTM needs to outsource some manufacturing process orders to local manufacturers. YTM has a process of checking the lead time for each order they accept and therefore the due dates for customer orders are checked against the lead time. Usually the company asks for a little time before they could actually accept an order and if losing the client can be very crucial for the company in that case the company chooses to outsource. Furthermore, the companys standardized operations make it easy for the company to outsource any process such as weaving, processing and stitching, or partially finished projects to any other manufacturer at any time they need.

Carriers:
YTM uses two types of deliveries, one where the customer picks his order from the YTM premises and other where the YTM is responsible for delivering the customer order worldwide. As these orders are mostly global the YTM needs to use specialized carriers which are not a part of YTM. For some orders the customer specifies the carriers and for some orders the YTM chooses the carriers themselves. This process of delivering the orders to offshore locations is outsourced by the YTM.

PRODUCTION PLANNING

The production planner must devise a plan to satisfy the market demand within the resources available in the company. This will involve determining the resources needed to meet the market demand, comparing the results to the resources available and devising the plan to balance the requirement and availability. In other words we can say that production plan works at equilibrium between the priorities and capacities.

As far as the priority is concerned YTM has major focus on their retailers because with them YTM have usually contractual based orders for the whole year programs. So their demand and order dates are easily allocated over the whole year. So YTM prefers their top most places in order sequencing to the retailers as they have a contract and they are obliged to give deliveries according to the given yearly and quarterly schedules. Importers and buyers get the consecutive priorities. As far as the capacities are concerned its not big issue for YTM as they can outsource anything up to any extent if there is no such core competency in the textile sector. YTM also gets orders that they cannot produce in house as they do not have all technologies. But in this case too they do not lose the order because saying no to their loyal customers is not in their book. YTM is a big giant in the textile sector has major emphasis on their priority and capacity by giving top most priorities to their customers and have always high capacity arrangements to serve the cause.

INVENTORY MANAGEMENT

Inventories are materials and supplies that a business or institution carries either for sale or provide inputs or supplies to the production process. All business and institution requires inventories. Often they are a substantial part of total assets. YTM emphasizes very much on their inventory management. As their work totally depends on their projections, YTM has to maintain a significant amount of inventory. 70% of the YTMs inventory is based on their forecast. Although their inventory level always keeps on changing so they do not have any predetermined level of minimum inventor y.

FLUCTUATIONS IN THE INVENTORY LEVELS:

As discussed earlier inventory levels are ever changing. This is because there are plenty of unusual orders that arise from nowhere i.e. no projection is made for them. Still YTM oblige to such orders and they are served with the maintained level of inventory and therefore lead times for such orders are very low (about 4 to 6 weeks). These sort of unusual events are very common in textile sector and especially for YTM. So the inventory level cannot be maintained throughout the year on an average level. Moreover point for such level cannot be determined as these orders are seasonal and there is no confirmation for these orders in the future. Other raw inventories have their fixed reorder points as they are frequent inputs for machineries and so their demand can be predicted as they are working on almost full capacity round the year. So as there is a fixed output for the machines and so their inputs are also fixed but there is a little variation in their usage depending on their product. Still their inputs can easily be measured and their early demand can be forecasted. They also have a good relationship with the suppliers of these inventories so their ordering system is also not very time consuming and suppliers also know that YTM is going to require this much amount of supplies around the year

HEDGE INVENTORY: YTM do emphasis on the seasonal purchase of the raw materials. As in the off season the prices of their raw material decreases. When the prices of the raw materials are expected to be decreasing in the future YTM controls over their purchases and acquires minimum amount of inventory to serve on short time needs. When they expect to have an increase in the inventory they buy the raw materials in a large quantity. Therefore the YTM purchases a significant raw material like yarn in off season and stores it in their warehouse because they have huge

storing capacity to stock inventories. But their working is efficient so their carrying is comparatively very low. When there is an up market for inventory there is not much affect on YTMs production as they have already stocked a substantial amount of inventory and so the increasing prices do not affect their over all costs of production.

CONCLUSION
YTM is a vertically integrated organization with a tall Supply Chain Structure, operating with 90% special orders and contingent forecast for contingent situations. The group is public unlisted entity with a vision of aligning the spinning and weaving departments, inducting logistics fleet; environment friendly measures with basic operations and so forth.