Wall s Ice-Cream

Wall s Supply Chain Process

Project report

Submitted to: Ms. Saba Rana

Submitted by: AwaisGhulamNabi ZainNadeem

Lahore School of Economics

Wall's Heart brand

The Wall s Heart brand stands for a good honest scoop of pleasure. Its philosophy is to be an evangelist of pleasure.

Wall's - Global Leader

Wall s is sold in more than 40 countries making it the most widely available ice cream worldwide. Unilever is the global leader of ice cream manufacturing with almost 18% of the global market share.

Adding Vitality to Life

With customers becoming more health conscious, Wall s has also taken a conscious step to providing healthier and nutritious products. Wall s innovation centre in UK is constantly working on making healthier products by reducing the fat content in the products yet offering the same great taste. Even on Kids products, Wall s is striving to be the better choice by lowering sugar content and introducing nutrient rich offerings like Moo which has calcium equal to one glass of milk.

History of the Heartbrand

Though Unilever has been selling ice cream for decades, the Heartbrand was launched world wide in 1999. The Heartbrand logo is common to every country and has come to be synonymous with quality treats. Wall s operates under different names in different markets (Wall's in the UK and most parts of Asia, Algida in Italy, Langnese in Germany, Kibon in Brazil, and Ola in the Netherlands).

Wall's Pakistan
Wall s came to Pakistan in 1995 establishing the Wall s factory on Multan Road in Lahore. Fully equipped with state of the art machinery, the Wall s factory is a standard of hygiene and technology in the region and has become synonymous with quality. In 1998 Wall s acquired Polka, a local ice cream manufacturer. Some of the most popular brands loved by the masses were now linked to Wall s; making an irresistible combination that few could refuse. Key facts about Wall s Pakistan:
y y

Wall s is the market leader of the Pakistani Ice cream market All Wall s products are Halal and are made with Halal ingredients in a Halal compliant manner

Ice Cream Makes You Happy Its Official!

Wall s carried out scientific research which shows that ice cream actually makes you happy. The study was carried out using FMRI brain scanners, and showed that eating Wall s had an immediate effect on the part of the brain that is activated when someone is really enjoying themselves the pleasure areas. So we now have scientific evidence to prove what we all already knew, that ice cream really does make you happy!

Walls Heartbrand Products

Feast was one of the first Products introduced by Wall s in 1995 and to date remains one of the most popular treats that Wall s has to offer. Truly a chocolate lover s delight, Feast comprises of 3 layers: a thick chocolate coating with rich chocolate ice cream inside and a smooth chocolate bar in the center.

Donut was launched in 2005 and has quickly become one of the most loved products to date. Donut s unique shape and quirky packaging makes it a favorite with both kids and adults alike. Boasting a thick chocolate coating with a generous sprinkling of peanuts and a premium vanilla ice cream inside, Donut satisfies the hunger and the ice cream urge alike. Jet Sport and Choc Bar were acquired by Walls in 1998 with the acquisition of Polka. These are two of Walls most popular brands to date.

Wall s Products
y y y y y y y y y Feast Cornetto Magnum Jet Sport Donut Choc Bar Choc Dip Kulfa cup Mango cup

Introduction:
Wall s Ice cream comes under the foods and beverages part of the Unilever chain. Wall s ice creams are consumer, nondurable, convenience packaged goods. Wall s has a variety of products, ranging from low priced desserts like Rainbow to premium priced desserts like Cornetto and Magnum.

Production Unit:
One Unit at Manga Mandi. Factory Address: Lever Brothers Pakistan Ltd., 46 KM Manga Mandi,Multan Road Telephone: (92-42) 540301-540309 Raw materials: Contract Suppliers Production Capacity: 10,000 Liters / day

Perishability
y Required Temp: -18C. o Life time (Out of freezer): 25 min. o Expiry: 10 months.

Packing
y y Packaging: Multiple packaging Small packs o Sticks o Cones o Cups y Take home packs: o liter packs o 1 liter packs o Tubs y Bulk packs: 10 liter packs

Growth Rate
The ice cream industry itself is growing with a reasonable rate, but for WALL S the growth rate is quite encouraging.The major reason for prevailing this dream like growth rate is the radical growth seen in Cornetto in recent years. WALL S growth rate for recent year was 12%. Other information Wall s has a 28% share in the ice cream market; 25% of which comes from the take home range and 64% of the impulse range the highest in the entire industry Ice cream is made from milk, fat and sugar. These are cooled as they are mixed, thenwhipped to create a light, airy texture. Flavourings, fruit or chocolate are added then the whole mixture is frozen again before packaging

Supply Chain Stages

Sourcing

Planning

Manufacturing

Delivery

Suppliers
Raw materials for the ice cream are provided by third party contractors. Raw materials including the ingredients are collected both locally and internationally. Raw materials from foreign countries have the maximum time limit to supply the lot within 90 days. The formula for one product is standard worldwide.

Manufacturing
After the production of ice cream is done in the factory, the finished goods are distributed to the distributors which are out sourced. There is no specified production target. Forecasting of the ice cream is done on the basis of the sales history. Seasonal effects are also kept in mind. The demand periods are also viewed before the forecasting.Then by viewing these aspects decisions are made logically.

Distribution
One of the competitive advantages of Wall s is its availability, which is ensured by extensive distribution. The distribution of ice cream is different from other products. To keep it in a good form it must be chilled at appropriate temperature. For this purpose deep freezers are used, which are provided by the company. However, the running costs are to be paid by the retailer. For this purpose walls gives a margin of 18% to its retailers\distributors, which is distributed over entire channel. Pakistan is divided in three major sections. These are as follows: 1) North (Islamabad, Peshawar and Northern areas) 2) Central (Lahore and Central Punjab) 3) South (Sindh and Baluchistan)

Retailers
The primary dispatcher of the finished goods is Unilever. The secondary dispatcher of the ice cream is the concessioner, who further distributes the ice creamto the general stores and to the end consumers. Unilever has good relations with its distributors and with the retailers. These are reliable relations which are motivated by Unilever through price discounts on bulk purchasing.

Distribution
Distribution of the finished product is done via chilled vehicles, equipped with high quality freezers, which take the product to the four regions of the country, from where the primary sales takes place, continuing the process further towards the distribution centers and from there the product is sent to the end consumer.

Cold Stores Chilled Vehicles

4 Regions Primary Sales

Distribution Centers

Secondary Sales End Consumers

Distribution Centers
There are two in-house distribution centers of Wall s in Pakistan. Located in Lahore and Karachi, both having the storage capacity of 2000 pallets. There are other distribution centers which are not under the control of Unilever, they are operated by third-party contractors. From the distribution centers, the finished goods are further distributed to the market and from there to the end consumers.

Distribution Channels
Distribution channel consists of all the people and organizations, which are involved, in the physical distribution of goods. Selection of proper distribution channel is very important aspect because if the channel is managed efficiently. Companies can save high costs and thus generate profits. The cooperation of channel members is also of vital importance. Distribution is making the product available but this availability should ensure that product must be: y y y At right place At right time In right condition

If there is any deficiency in any of these basic elements of distribution, the future of product would be uncertain. Distribution is such an activity, which could decide the fate of the product. Wall s has a Hybrid Distribution System. It reaches different customers through different systems. Wall s is using two types of distribution channels, both are indirect channels. y y y Producer Distributor Retailer

This is commonly used, in which the Wall s factory send the products to the local distributors who supply the products to the retailer in the required quantity. The retailer then sells it to the customer. The specialty and effectiveness of this system is excellent. The reason for such an excellent distribution system is the distribution policy. If a retailer wants to sell an ice cream, the investment he needs to do is as:

Security for Retailer the freezers

Investment on

Total Board advertisement required for investment

Ice cream products

Others

15000

12-15,000

3000

30,000

WALL S

Nil

12-15,000

Nil

15,000

That s why most retailers are attracted to the Wall s. Another important thing which needs to be discussed about the distribution is that during this distribution channel, the standard temperature of the cold chain is maintained. y y y y y Producer Stock Pointer Dealer Retailer Cycles Consumers

The second type of system was more a short term distribution system which has just for the introduction stage to actually made the product reach everywhere and the system was more of creating awareness than actual retailing purpose. But the cycle distribution system yielded excellent results in terms of sales and creating awareness about the products. Now the cycle contributes a big percentage of shares in the overall sale of the company. So this has now become a permanent distribution channel of Wall s.

One of the major reasons of early success and clean sweep given by Wall s is its availability, which is ensured through extensive distribution. There is not even a single city in the country where one cannot find a walls freezer or hear the sweet music of the trike (tricycles), which acts as a direct marketing for it. Thus,Wall s has always tried its best to ensure the availability of the product as close to the customers as possible and Wall s has been very successful in that.

Distribution Strategies
There are two main distribution strategies, which Wall s has very effectively used: 1. It includes incentives like free deep freezers, discounts on bulk purchases. 2. Advertising campaign that reminds and persuades customers to buy ice cream supports 2nd strategy, which is facilitated by price offs, which are frequently offered by the company. 1. Customers Price discounts Quantity discounts 2. Distributors Shares 50% of the distributors' expenses Off season discounts: 5% 3. Retailers Free freezers to retailers Investment on each retailer: Rs. 22,000 Free freezers maintenance 4. Street Vendors Free Trikes

Transportation
As said earlier that ice cream is a very delicate food and should never be allowed to rise above -18 C for super market products. Scoop ice-cream should be stored and transported at -18 C, but may be dispensed by retailer at -15 C. ice-cream is stored at colder temperatures than most other frozen food and needs extra special care. When ice cream is allowed to rise above these temperatures then this is called "Temperature Abuse". This will lead to "Heat Shock", where large ice crystals form and the product start to shrink. These defects can never be reversed. So it becomes a very important to transport ice cream in truck with heavy-duty freezers. Thedistributor should always take care of trucks and keep them

properlymaintained. Smaller trucks are used for deliveries within the city and bigone for the transportation of ice cream from production plant to thedistributors. Transportation of the finished good has been allotted to the third parties. Agreements are made which include various conditions like; the price is set for the distance of the distribution center from the factory.

Sales
The product is sold directly to the customers or to the distributor via primary sales. Minimum requirement for directly sale is 1 case, which contains 24 items. In primary sales which are done with the distributors have the minimum requirement of 1 pallet having 164 cases.

Pricing
Pricing objective of Wall's are market growth, sales volume and also makingprofit. To achieve these objectives Wall's often add new features in theproduct and also decrease its price. Wall s gives the consumers high quality at a low price. Pricing strategies There are two main strategies for pricing, which the companies adopt: y y Market-Skimming Pricing Market-Penetration Pricing

Skimming Pricing
Market skimming involves setting a price that is high in the range of expected prices. This strategy is particularly suitable for new product because in the early stages of a product life cycle, price is less important and competition is minimum. Product user is from high-income group and they are financially strong and they are not price conscious. Profit margin is high. We cannot set this strategy for a long period of time because after some time competitor arrives in the market and competition among them start.

Penetration Pricing
Establish distribution centers all the cities where the Ice-cream to be supplied, these distribution centers will have a storing facility i.e. a large freezer room for storing the ice-cream, the temperature maintained in the freezer room will be -50 degrees Centigrade. These distribution centers will be responsible for the flow of product. They will take orders from a market, fill them and provide on time delivery to the retailers. These distribution channels will be run by the wholesalers, they will required to keep a certain level of inventory to fill the customers orders promptly, completely and accurately. Each city will have one distribution center that will cover the whole city.

Stores
y y Cold Store Dry Store

Cold Store
Cold store is used to store the finish product i.e. ice cream. The capacity of the cold store at the factory is 2600 pallets.

Dry Store
Dry store is used to store the raw materials including the packaging materials. The capacity of dry store is 2300 pallets.

Warehouses
The warehouses are fully equipped with high quality deep freezers, having the ability to store the ice cream for a certain period. Wall s don t have any warehouses other than the stores available at the production site. For the storage of the finished goods Wall s have outsourced the storage of the ice cream. All the major warehouses are located in all the four regions of the country.

Order processing
Orders are placed by the distributors. Orders are processed with-in 24 hours for the Lahore and Islamabad customers. Distributors located in South region have to place the order three days earlier.

Quality Standards
Wall s have three ISO standard certifications: y y y ISO 9002- Quality certification ISO 22000- Food Safety certification ISO 14001 Environment friendly certification

Customer Services
Wall s focus towards end consumers. They make the product for the end consumers. Costumers having any kind of complains or suggestions can contact the contact the management through the Raabta Consumer Careline.

Information System
The information system used at Wall s is MFG pro. Which has all the data including the raw materials, packaging materials, information about the suppliers, forecasting information and finished goods inventory.

FIFO and FEFO

First In First Out (FIFO) is a method of valuing stocks (inventory) for accounting purposes. Stocks issued (such as for sale or further processing) are assumed (for calculating the cost of sales) to be issued from the oldest available stocks. First Expire First Out (FEFO) attempts to ensure that perishable products are sold while they are still in good condition.

Recommendations
By looking over the supply chain process of Wall s, we ended up resulting in that the management system Wall s is using is not good. As they are currently using MFG pro for the databases, they should implement SAP for better forecasting and for convenient data allocations. SAP will help them locate the stored raw material or stored ice cream more efficiently. Another suggestion for Wall s would be that they should start the transportation of finished products by themselves, which will help them in saving the extra cost they are giving to the third party contractors. The lack of warehouses is also a problem. If there are more warehouses then it would be effective for them to respond to the customer demand quickly. As they have ample area available in the production site, they can also build a storage facility there as well, resulting in more storage of the finished products. As the ice cream industry is growing and more competitors are entering, Wall s should introduce more products with more delicious and tempting flavors to compete with the competitors.