Production Process of Olper’s Milk Cow and buffalo milk is collected and transported from farms to dairy
plants through tankers that maintain a chilling temperature of around 4 to 5 ºC. When this milk reaches
the dairy plants, it is stored in isolated tanks where it is further 16 processed. This milk is then tested in
the dairy plants to check the quality and the milk that meets the quality standards is chilled again, and
pumped into the chilled holding tanks. The milk is then cleaned either through centrifuged or filtration
before getting pasteurized followed by toning/standardization and homogenization. Then this milk is
again transferred into another holding tank where it is again further processed. This further processing
might involve UHT (ultra-high temperature) and aseptic drying or filling in order to make dried milk.
Inventory Turnover at Engro Foods Engro Foods inventory is replenished on every 26th day of the
month. Warehousing and Logistics at Engro Foods No matter where the customer is within Pakistan,
Engro Foods make sure that their product Olper’s milk is available at every store. To make this happen,
Engro Foods integrate all its processes, from the farm to the markets and the company make sure that
its product is available in the right quantity, at the right time, and on the right place. Engro Foods has
outsourced all its logistic network and commonly relies on 3PLS. They have outsourced all their non-core
activities, such as transportation, which is mostly rented depending on the quantity of milk which they
want to transport, in order to minimize their costs. Even though all transportation of their product is
outsourced but they have their own distribution network. Inbound Logistics Long dedicated vehicles are
used for inbound logistics to transport raw milk from farms to plants. Raw milk is collected and
transported from farms to 40 milk collection centers of Olper’s milk, located in various areas of the
villages where the quality of the milk is also checked. If the raw milk passes the quality test, it is stored
until it reaches 9,000 liter capacity at each collection center, from then it is 17 transported to the plants
through specialized dedicated vehicles for production. When these vehicles reach the plants, again, the
quality is checked before processing the raw milk in the plants for production. This raw milk is mostly
collected from various cities of Punjab and Sindh, which include Lakhi, Rani Pur, Ahmed Pur East, Dharki,
Nawab Shah, Dhokri, Rohri and Sahiwal
Distribution Network at Engro Foods Engro Foods have around 400 distributors for Olper’s milk that are
situated in every major city in the country. Moreover, all transportation for Olper’s milk is outsourced. In
Pakistan, the distribution network for Olper’s milk is divided into 3 geographical zones, which are further
divided into regional offices for sales. North Zone Central Zone South Zone Peshawar Multan Nawab
Shah Rawalpindi Lahore Karachi Gujranwala Punjgur Hub At Engro Foods, distributors for Olper’s milk
has been selected based on their financial strength, infrastructure efficiency, logistic fleet, trained and
efficient sales force, past experience, knowledge about the market and their use of technology.
Moreover, there is a fixed percentage of markup for all distributors which is around 4% as Engro Foods
does not negotiate on prices for Olper’s milk with distributors. After discussing the requirements of the
market, monthly targets for sales are made for each distributor. Furthermore, in order to convince the
retailer to buy in bulk quantities from distributors, retailers are usually taken into confidence by
product’s quality, features and brand name rather than using the distributor’s goodwill and credibility to
convince the retailer to buy. Then after this, the reputation of the distributor plays the role of value
addition in the whole transaction. Another responsibility of distributors is to provide customers’
feedback to the Olper’s team for further planning. Regarding the purchase order 20 process for Olper’s
milk, distributors are the buyers who initiate this process by submitting their payments in advance to
Engro Foods and then they provide the purchase order to the department of sales of Engro Foods
through email whenever they are low on stock. After properly processing these emails in the form of
purchase orders, they are sent to the department of finance for invoicing purposes. Moreover,
dispatching of the desired goods from plants/warehouses to the customers (i.e. distributors) is also a
responsibility of the sales department. As the distribution of the goods to the retailers who are then
responsible for selling the products to final customers is not directly managed by Engro Foods but rather
being controlled/handled by their 400 distributors to whom they supply their inventory, difficulty in
exercising supervision and control on the overall distribution activities might occur. And this can make it
more difficult to obtain accurate information regarding sales, timely delivery, proper storage and
appropriate procedures for marketing. However, Mr. Nasar Ali insisted that even though this
responsibility is not directly under Engro Foods, but feedback is still collected and proper contact and
coordination with all distributors is also maintained as much as possible. Reverse Logistics and Olper’s
Milk Return Policy In case of any defect, Engro Foods have an efficient return policy for Olper’s milk. A
certain batch number is given to every item or carton and if any defect is detected in these items or
cartons (which is usually in very small quantity) then the batch of that particular carton or item is noted
before disposing it off. However, if there is a large defect, then the same delivery truck who delivers the
order to the distributor is responsible to take back the whole batch back to the plants. Once this large
defected milk quantity is returned to the plants or warehouses, it is then 21 drained. However, the rate
of normal losses at Engro Foods due to defected milk is very small which is around 0.04% per year.
Packaging Engro Foods always try to minimize the negative externalities or effect of their activities on
environment without endangering the safety, quality and acceptance of their products by customers.
Engro Foods’ entire dairy product packaging is dependent on Tetra Pack. Engro Foods have only Tetra
Pack available for the packaging of its products, including Olper’s milk as Tetra Pack is having a
monopoly in Pakistan in the packaging sector. Proper packaging of milk is very important as it is a
perishable item that needs to be preserved for few months. In order to meet this goal, Engro Foods
deliver fresh Olper’s milk to its customers through using Tetra Pack without compromising in health
measures. The following are some objectives Engro Foods have in mind regarding Olper’s milk
packaging: Maintaining Pack integrity while attaining the lowest possible volume and weight of
packages. Identifying and taking into account new processes and packaging materials that helps the
company to minimize the impact of unnecessary transportation on the environment. Avoiding the use
of those substances during production, packaging and disposal that might have the potential to
adversely affect the environment. Minimizing wastage of packaging at every stage of the supply chain
which includes, manufacturing of package, utilization as well as disposal. 22 Increasing the use of
materials that can be recycled easily, wherever possible, and increasing the compatibility of packages
and recyclables with their existing schemes of waste management. Storing packaging materials in a dry
place which are located far away from the areas of manufacturing and using them in a clean and
sanitary way which is nontoxic. Processed products’ packaging is done in a way to avoid risk of
contamination and also protecting them from contamination until they reaches to the final customers
safely.
